I did find a decent enough solution to the latter with Light Flow.
To use the Light Flow App successfully on this phone I had to to do the following:
1. Be rooted of course
2. Run Light Flow in Compatibility mode.
3. Enable the mixer for all notifations that I want to be notified for. I cannot actually mix the Amber and Green to produce any more colors but with the mixer feature turned on, I am able to select one of two colors for Notification and then select whether I want the LED to Blink or be Solid for a notification.....
For example: with mixer enabled, I have SMS flashing green but I have emails coming in as solid green. I have have low battery blinking Amber but I have solid Amber for a missed call.
3. Disable all the notifations you do not want enabled. For example it comes with notifation for loss of signal enabled by default and if signal is dropped for a second it was continuting to blink until I went into notification.
Couple other items of note:
1. If fastboot is unchecked the Light Flow App will aquire root access on it's own after a reboot. (the led will blink until Light Flow aquires root acess) However, if I have fastboot checked and I reboot it seems like sometimes Light Flow won't aquire root access until I open the app once which will initiate it to aquire root.
I should probably add that my notifacation LED now blinks or stays solid until I acknowledge the notification which is a decent enough compromise for me although I would love being able to have more colors like on my G1.
I'll edit this I find out any more but I've been using it for a bit and it's working out ok for me so far.