I've actually heard that the GM remotes are notorious for bad range, and just to be sure I did replace my battery a couple of times, and I also resort to using the whole "chin method". My wife thought I was nuts, but after a few times I proved it to her and now she is a believer in the "chin method".
I looked at the H2 owners manual and I think EasyEd is almost right. The remote starter probably only tries to flash your parking lights. The way the H2 is set up, at night the lights (parking and headlights) come on automatically, but when the remote starter manually switches on the parking lights, the headlights turn off. You can do this yourself by turning the headlamp switch in the truck to "parking lights mode" and the little green "Auto" indicator next to the switch turns off. With the remote starter, I see this little light blinking in unisyn with my headlights. So I don't think there is a way to disable the blinking headlights.
Unless anyone has a few more ideas?