PS2 may be responsible for the blinking, but not for the underlying problem. Simply don't lose the target when blinking, that is something SE can fix without hurting the fragile PS2. Blinking itself is a good thing imo and can be very useful (although probably not intended by the devs).

And 100% agreed on #2, "equipment changed" notifications are horribly annoying. No reason not to at least offer us the option to filter that out.