The flashing highlight warning starts before JPEG clipping occurs; on my 1Ds and 1D-II it seems to start at about 245 or so. Anything above that will flash even if it isn't clipped in the JPEG. So by adjusting the JPEG contrast setting, you can change the RAW level where the JPEG clipping indication begins. If you have contrast set too high, then you'll find yourself unnecessarily reducing exposure in situations where the RAW isn't clipping at all, just because you see a lot of blinking highlights.