IIRC, the flashlights were stock, but one of the effects the used was sensitive film that made the lights look fiercy bright. They filmed in a very dark environment with very sensitive film, and that made the lights look very bright. Can't remember exactly, but something I saw somewhere on special effects.
I think the reason they did this was the same reason the X-Files always used Maxabeams - to project a 'beam' effect through the humidity/dust and produce a 'close in effect'. Provides for more tension in the X-Files, because it gives a kind of tension due to a perceived 'crush' of environment. Also, instead of a simple flashlight in their hands, and a spot of light chasing around, they get the neat effect of this blue beam lancing around.
In Close Encounters, I think the effect was done to provide an E.T.'s perspective of the oncoming humans: terrifying pursuers with lights that would absolutely not fail to find him. I think that the lights here were meant to be an extension of the people holding them, their beams were connected to the people by the visible 'beam' and its touch was almost the same as having one of the humans grabbing him with a hand. The thing that makes him burst into a run is when one of the light beams starts lighting him up.
Again, I can't remember where I saw this, but it was a 'making of' kind of thing. In several places, they kind of make the movie from E.T.'s perspective.
VDG
