Write it in portable Perl and it could run both on Windows (as a native .exe) and on Unix (including OS X). (I have a license for the ActiveState perl compiler.)
It'd work like this.... it runs as a daemon. On Windows, it'd include a system tray icon.
It periodically does "checkfriends" requests to the real LJ server, downloading new entries.
It includes a web server which listens on http://127.0.0.1:8097/ or something (97 is above LJ on the keyboard... *shrug*)
Upon hitting it with a browser, it returns a page of options... configure accounts, force refresh, etc. And it includes links to http://127.0.0.1:8097/users/bob/friends and such. But instead of going to the real server, it makes the HTML itself from a local cache of the entries. Likewise, it caches the userpics and mood icons.
On Windows, the checkfriends checking it's already doing can trigger the flashing, and upon double-clicking, it could open up a web browser to the friends page that updated.... immediately.
As for comment counts... a new protocol mode can be made which only returns comment counts given a bunch of item ids.
Implementation step #1: don't worry about it being pretty. just make it work.
Implementation step #2: give the rest to me (unless you want), and I'll tie S2 into it, which will soon be deployed on LJ anyway. The friends page could look exactly like whatever the real thing being displayed is.
Anybody interested in taking up this project for money? LiveJournal would commission it. But I need a talented programmer who knows what he/she's doing, and is responsible enough to see it through.