Hi! I have just tested in Konsole and xterm, and for me, it was working as expected. If I run "lolcat file.txt", it displays the content of the file with nice colors, and if I just do "lolcat", then it behaves like cat, and repeats the lines entered in the standard input (only with colors), and ends with ^D.
Can you send the exact command you tried to run, and the names of the terminals you tried? Cheers, Cédric