I don't know if I'll get any help here, but I'm waiting on a login to to gnome.org forums, so here goes.

When you use the left and right arrows without any text to scroll through, the entire gnome-terminal blinks white, then black, then white.

After some extensive googling, I see a lot of people editing the gnome settings->sound and turning off the visual beep, but I don't think this is the same thing.

if I type:

echo -e '\a'

Then the "visual beep" happens, which is a mild flash of the title bar. This flashes the entire terminal window.

the settings in the current profile seem to have no effect, the settings in control center -> sound system beep also seem to have no effect.

is it possible the underlying terminal application is causing this?

I have Suse 10.3, and gnome-terminal 2.18.2.