You are correct.
If all four wheel rails of the track ae getting the TMCC signal (the two standard gauge wheel rails in addition to thee two O gauge wheel rails), then all four rails are getting the TMCC signal at the same time, and trying to broadcast it straight up. When that happens with the TMCC signal the radio wave is being pushed flat by the two closely spaced wheel rails, and the signal is never getting into the antenna on the TMCC board in the locos. It also happens when you have two parallel O gauge tracks, or a multi-level layout when one track is directly overhead of another one. The flickering headlight is the "tell-tale" that a clear signal is not making it into the antenna of the locomotive.
The only fix that I know of is to keep the AC Common (with the TMCC signal) out of the standard gauge rails when you are operating the O gauge trains, and vice versa when you are operating the Standard Gauge trains.
