I'm seeing this same problem.
After the first handful of assembly steps, I did Test 1 (http://www.ladyada.net/make/tvbgone/sol ... ent_431554
) and noticed the green led behaving as OP described. I'm using two rechargeable AA NiMH batteries.
Once fully assembled, it kept doing it with all the lights. Batteries in => lights blink. I can take a short video of the behavior tonight if that would help.
Is there any specific part of the device I can check to troubleshoot?
(I bought my kit from Mitch and sent an email Jan 31)