I believe the flickering is to tell you that one of your items has hit an opponent, which makes sense with the use of bananas you mentioned. There was something similar in the original (at the very least, your player would yell in triumph).
And indeed the flickering also happens when someone uses the Start item, which makes all opponents smaller, slower and more vulnerable.
Green shells fire directly forward of the player. Red shells home in on the opponent whose rank is one higher than the player. And, blue shells navigate along the track until it homes in on the player who is currently in first, potentially hitting other players along the way.
In the original game, green shells traveled in straight lines, bouncing off of walls as it progressed through the track. Due to byte constraints, I simplified the motion. The green shells still fire directly forward, but they will also follow the curves of the track instead of bouncing around them. You can actually take advantage of that to target other players.
And, by the way, it really is the map from MK64 except for the elevations; this version is more hilly.
In the prior version, when you applied the star, you became temporarily invulnerable and the player flickered until the star was used up. However, in the new version, the player cycles through different colors instead.
Also, thunderbolts temporarily shrink all the other racers making them slower and weaker. The background flashes when a thunderbolt is applied.
In the new version, the player can obtain either 1, 3 or 10 mushrooms, the latter taking place of the golden mushroom due to space limitations.
Triple red shells work, but the green ones disappeared the first time I hit C. I first thought you gave items to any carts that passed a line of item boxes because I seemed to get them even when I obviously missed. Later the opposite occurred. ???