According to the book, the light should come on when there is 5 litres left out of 15. If you have done 120 miles before the light, in theory you should get another 60 before running dry. Yeah, I wouldn't try that either
For the record, the most I have done before refilling is 163, and on that occasion it took 11.82 litres, so I was safe for another 10-20 miles at least I would reckon.
What I always do with a new bike (and will do on the XTR when I get a free day) is fill it up, carry a 2 litre can on the back, and hoon it about until it goes onto reserve (or lights the fuel light), note the mileage, and then run it until it is dry, and note the mileage again. Fill from the can and get to a filling station pronto. You have to ride it pretty hard for this procedure, as this will give you the
minimum you can expect once the light comes on. You then have the option to baby it in future if you think you are running low and you know you will have
more than your calculations.
As to the flashing light, I think it is just the way it is wired up. The sensor bobs up and down and the fuel light responds, although the computer knows it has flashed and starts the mileage countdown regardless. On my car, once the fuel light comes on, it stays on no matter what. Just different logic in the circuits.