Here's my 2 cents-- similar to others.
I've done two custom locos.
The first was with clear Testors decals from Wal-Mart on a black inkjet printer. They are a little thick- but work.
Locomotive colors that work with dark letter decals are white (Soo Line), orange (like CSX MOW), gray (EMD), silver (AMTRAK), and yellow.
Now, the testors pack also has white decal sheets, so you could make a herald of any color.
I also made the following loco which had a simple scheme with the cab as one color and the body another-- nothing complicated. and nothing to mask. Many shortlines do this.
The white decals were drawn and designed by me with Corel DRAW and then were made for me. Notice how the Gulf Central herald on the hood is a clear decal and the Gulf Central words and the seagull are actually clear so that they take the color of the background body shell.
I did the same thing on the small two-letter herald on the yellow switcher above.
