My next guess is Vivi

For now I'm gone (Dies)
But never forgotten (Of course net, who could forget Vivi)
Once used for protection (Spells perhaps)
But no longer so (Because of the whole being bereft of life thing)
I am never seen while im alive (Technically not alive because he is made of mist, the souls of the people of gaia)
But I still move but with help from my master. (The mist is maybe Vivis master)
Hints:
Gets replaced before the game ends. (Lots of little Vivis in the end FMV)
Is given away freely (on Disc 1) (Got me beat this line it throws the whole Vivi guess away)
Colour is an important factor. (Black - He's a Black Mage)

Oh wow this is really hard. I love this riddle. The hints have made it even harder and made me want to solve it even more. :mog: