In Mental Ray there is a limitation about using different materials for a same custom object:
You can assign the materials in the Geometry List, but only is used one of them. This is an old issue that we should had solved some time ago, but the solution is not easy because the way that Mental Ray works. If you need to use several materials, it is better to create a copy of the custom object.
Anyways, in this case there is an easiest fix. You can use a unique material, apply Forest Color to it, and enable the Tint options in the Forest object (Material rollout), instead of Forest Color (leaving off the Override checkbox).