Mine are constantly flickering.
Yes, this is normal. Mine do the exact same thing.
Using the APM2 RX and TX lights as status indicators for the PPM Encoder is new in the ArduPPM 2.2.66 firmware.
<RX><OFF> no pwm input detected
<RX><TOGGLE> speed of toggle indicate how many channel are active
<RX><ON> input lost (failsafe)
<TX><OFF> ppm output not started
<TX><FAST TOGGLE> normal PWM->PPM output or PPM passtrough failsafe
<TX><SLOW TOGGLE> PPM passtrough