I can also confirm. This is happening to all players on our SMP server, and also happens in single player as well on all the platforms we've tested it on (Win7 64 bit, XP 32 bit, Linux 64 bit).
We have a player who hates monsters and likes torches, so a wide area around our town is extremely well-lit with thousands upon thousands of torches. When you walk through here, disembodied torch flames are flickering all around you in all directions by the HUNDREDS. The things are almost as numerous as the stars in the sky. It could almost be picturesque, like fireflies, if each individual torch flame lasted longer. They seem to teleport around your field of view randomly and each one appears for only 1 frame, then goes somewhere else.
I've read through MC-984 and all of its attached comments. It seems similar to the bug we are experiencing, and may yet be the same bug. It seems to share some commonalities, but without more information I can't be sure.
I just whacked our entire world map with MCEdit, and there are NO beacon blocks in use anywhere. Ours is a survival-only server. Nobody has creative mode, and to my knowledge no one has even summoned let alone killed a Wither to get a Wither Star yet.
We DO, however, have a lot of maps around and also quite a few in item frames. I noticed one commenter in MC-984 mentioned having a lot of framed maps, so possibly the situation is related to THAT, though I cannot be sure. I will try removing all the item framed maps I can find and see if the problem persists, or takes longer to crop up with fewer maps.
Just tried it. We didn't have any beacons in use in the first place, either. This issue does not appear to be related to beacons.
Evidently this bug has been licked as of 1.4.5. After updating we don't experience the problem anymore. It may yet have been related to, or the same as, MC-984.