The government announced yesterday it is dismantling a controversial airline passenger screening system called CAPPS II, which would have assigned every passenger a color-coded threat level. Under the plan, security officials would have collected detailed personal information about every passenger from public and private databases to determine how much of a threat the passenger posed. Homeland Security Director Tom Ridge said yesterday the system is being canned because of privacy issues. Under the system, a ’’red’’ rating would mean the passenger would not be allowed to fly; ’’yellow’’ would mean extra security at the airport; ’’green’’ would mean a trip through regular security.