I am very curious as to how these lightguns operate also. I actually have both the MadCatz and the Japanese Thrustmaster one (which works fine on US boxes if anyone was wondering). I also have the ACT Labs lightgun for the PC. The PC ACT Labs one does work by flashing the screen, it is very obvious and only does it when a shot is fired so you don't get real-time tracking. Both XBOX guns do not flash at all and give real-time updates as to where they are currently aimed (in other words: realtime tracking). I have noticed this realtime tracking in some lightgun arcade machines where the lightgun was mounted to the machine (ie: Terminator) but always just assumed that it was something like an internal joystick that was calibarated to match the screen or something.
I have also verifid that none of the lightguns (PC or XBOX) work with HDTV.