For the grade crossing, yes, it could be just one, if folks want to have to add their own flasher circuit. There is no point in adding a 555 and associated parts here as the uP can do the job with no additional parts. In my mind, the version that has the flasher built in would be more useful to more people, and the mode that just turns on and off is a throw-in for folks that already have flasher circuits or signals that have them built in. To get a prototypical activation, where the signal turns on well before the train arrives at the crossing, but turns off shortly after it passes, requires two insulated rails, one on either side of the grade (for two-way operation, anyway). Since both inputs are tied up anyway, we may as well use both relays and offer a flasher.
I agree, but you have to be careful about driving 4-8 LEDs on 2 arduino channels (20ma/channel I believe), unless you are going to give each LED its own pin. And if the end user has a older lionel bulb style (154??) flasher that will require 2 relays to trigger bulbs to flash. So really you could consumer a arduino just for making a prototypical flasher circuit with time delays.
