In Dead Cells, how does your level in the different colors work with split-color weapons?

I’m Dead Cells, some items belong to two of the three colors. When you have more levels in one of the two colors an item is, it becomes bigger in the icon for it. Does that mean that the damage for the weapon is only based on the higher level, or is it controlled by your levels in both colors?

It's only based on the highest level of whichever stats that item has at its base. The same holds true for Colorless, as that also applies whatever stat (Brutality/Tactics/Survival) is the highest in that run.

The wiki provides the same clarification:

When the player picks a stat, the damage of items scaling with this stat is increased by +15% (provided it is the highest value stat for dual-color items).