This was brought up recently. In 6.02 the help files say that if you branch select a parent and apply a material the children will inherit said material. However in testing with 2 poly cubes parented to another poly cube, when I branch selected the parent cube and dragged/dropped a material onto it the children do not get the new material. They maintain the default grey phong. I doubled checked the hierarchy in the schematic view. The parent shows a link/line to the new material and children do NOT show a link to any material, thus they should be inheriting the parents material. However they do not in either the camera/user view (when shaded) or during render. Perhaps this is fixed in
6.5?
~ James