I've been using an LED based color that I found at my local PetSmart retailer. They have them on their web page:
http://www.petsmart.com/dog/shopping...%5F21714.shtml
They are interesting in that they use an LED, but the LED lights up a clear, flexible (silicone?) "light tube" which is sandwiched between a standard reflective surface, and a yellow plastic cover.
The reflective content means that it works fairly well as a passive reflector too.
The effect is good - the whole surface glows.
The gotchas:
The parts with the light module, buckle, and D ring cut into the lighted surface area so maybe only 80% of the collar blinks.
The circut is not potted and isn't waterproof.
It's fairly bright, but, you know... Need... more... power...
I've been thinking about taking two collars and making a collar that does a full 360 as well as maybe make it brighter and waterproof.
FWIW, even though this works well, depending on the angle the dog is to you it can "dissapear", even with a blinking light. I think more power will help (as well as getting a full 360), but I think you need more areas of the dog need to be lit to prevent this - sides and spine come to mind. Of course then you get into the Christmas tree issue you mentioned.
A reflective vest might not be a bad idea.
-john