I wish I could've been at this guy's (impromptu?) show.
Your reaction reminds me of how I FEEL about magic. On one hand I love it- wonderful things happen which I have no explaination, things that CANNOT take place, but do; and on the other hand I hate it- I know I was probably bamboozled, and now have TO KNOW how I was tricked. In other words: there is no magic. A constant Love/Hate relationship. How do we magicians keep our sanity? You're obviously going a little insane right now, and, I'm sure, love it and hate it. Are we having FUN yet?
I don't know HOW this guy knew which cards were red and black. From the bare bones description you give it sounds like this individual performs this trick often and probably uses a method of his own devise or was taught the method by someone else's own devise. If this is NOT the case, off the top of my head, this effect could be accomplished by: Sleight-of-hand (corner bends, switched-in cards --don't laugh!), Shiners (as already mentioned), Deck Switches (memorized deck, marked cards --or oneway), or use of a Confederate (help to switch deck/or cards, relay info). I know you have stressed "borrowed" which leads me to go with the Sleight method. (Did he consistently hold the cards a "certain way"? If not, I would go with the Deck Switch method. Did he go right into the effect or was there a disarming "get to know you" pause between the borrowing of the deck and the effect?
Now, I could be totally off base on any of these methods. And if this IS something completely original (which I suspect) you're going to have to ask him for the secret. (I would take him out to dinner with full knowledge that the dinner is for the giving of the secret.) Then again, if this guy is a knowledgeable magi- the question remains: what method was he using. If he is a GOOD magician he would be using nearly all of the above techniques interchangeably. (Which pretty much destroys even well versed magicians of discovering the secret(s).) And if he is a REALLY GOOD MAGICIAN he would have included dramatic presentation points and would have made you believe, without a doubt, he possessed second sight. i.e. a card reading from a spectators' hands- from the other side of the room!, a reading from a sealed envelope, or even a read from a "burned-up" card- would show tremendous dramatic skills; therefore a most talented magician. But, it appears none of this took place.
It is most likely his best trick, and one he accidently discovered he could fool people with- including magicians! Don't you LOVE it?
Keep searchin', you'll find it...