The freaking crystal! (Y1) I removed the one in it and replaced it from one of my 2 parts donor 7800 boards. The first one I popped in the flashing colors were only occasional on the game ballblazer but didn't happen at all with dungeon stalker or any other games I tried. And more importantly, it didn't lock up either and BB and Dungeon Stalker both ran for several hours before I finally shut them off. I did try other crystals to see if I could get the slight flicker to go away completely but that only took it back to the way it was. So obviously something in the crystal I installed from the other 7800 seem to mesh better with this 7800. I also replaced every single one of the 3904s starting with Q3 and Q4 as both of those were installed. In fact this 7800 was kinda strange. Seem to use a later revision board, had C64 for the extra timing circuit on it, but was missing the rest of the ICs you usually find in that circuit? It also had all of the caps and resistors installed, whereas most of them show some removed at the factory by clipping them out or just not being installed in the first place. It also was using Sony 10ns speed RAM in it but no resistor installed on the bottom RAM chip as I normally see with most of the Sony RAMs. (BTW replacing RAM didn't do anything and in fact just gave me a black screen).
So all I can say is that timing on the 7800 doesn't have much room for tolerance it seems and that all of the components we find installed into the consoles was done so at the factory in what seems like a case by case basis?
BTW when I put it all back together and replaced all the RF shielding, the flickering seemed to go away completely at that point? I'm still not 100% sure it is 'fixed' but it is a strange issue for sure and one I hadn't yet come across.