Mike: Do they flash at some consistent rate, or intermittently? If the former, they are set at that factory to do just that. Not good for a MRR and you may have to replace the LED's in the signals else modify them somehow. If the latter - probably some circuit/wiring problem.
Boy, you are thinking about a $$$ can-o-worms. To create a signal system to mimic the 1:1 you will need some sort of detection widget for each block that is signaled, with associated logic to change the signal aspect. Most places there are Control Points ( Sidings, Junctions, Diamonds and special stuff; Lift Bridges, etc ) where the signals face away from it. Probably some sort of brain to control the whole nine yards too. It gets worse: Signals behind and in front the train can multiple aspects besides the protection signals in the block the train is in. If you have not been trackside to watch trains/signals - In BNSF country, there are 5 aspects - Red, Yellow, Flashing Yellow, Green and Dark - if you consider Dark an aspect. If the signal immediately in front of the train is Green, means that you have 3 clear blocks in front of you. Flashing Yellow - 2 clear...etc. Now you need some form of communication between the Control Points. Bruce Chubb created a massive system, all dedicated logic wiring to each of the blocks/signals. Miles of wire is miles of headaches. Me thinks it is better to use RS232/RS485 between Control Points, intermediate blocks and the main brain.
There is a ton of information on the web, Google it and be wary of what you are looking at. Also, Kalmbach ( I think ) put out a book: Signaling a Model Railroad - or something like that. See if you can find that critter.
Later