Excuse me, may I ask where you heard such nonsense?
To clarify what I said, some dairies take skim milk, “fortify” it with powdered milk, which boosts it protein level and improves its appearance, then adds butterfat to get a standard 1% or 2% milk. It does create a reconstituted taste, however, though it is only partly reconstituted.
This is accompanied by other processes, such as homogenization to break up larger fat globules, high temperature (HTST) processing, the “fortification” with either water or fat soluble vitamins. De-aeration of the milk prior to the addition of iron compounds was also found to reduce flavor problems. Calcium fortificant preparations including stabilisers and emulsifiers have been used for this purpose to maintain calcium in suspension so as to improve mouthfeel and appearance of products.
You were right about the blue dye, which was discontinued some years ago.