A Rainbow Party is, in all actuality, so that guys can brag to each other how popular they are. The girls wear a different colored lipstick each, suck off the guys they think are hot, until all of the do-able guys have been revealed. Then the guys count how many colors they have, and compare.
Ladies and gentleman of Urban Dictionary, it IS real! I had a good amount of girls in my class, year 2000, come up to ask if I wanted to join. There were pictures all over the school, not in the eyes of teachers, that I got to view and I was quite ashamed! Never even heard of Oprah talking about it, and neither had any of these girls. I assure you, Oprah did not make it up!
John could not believe how many colors he had on his penis! He thought surely he'd only get three at the very least. The sudden boost of confidence he felt was well worth the unease he had had before he joined in on the rainbow party.