I'd be tempted to shoot the real thing: get a string or more of Christmas lights -- the flashing kind -- string in in 3D space against a black background, iris down, throw the image out of focus and have at it. Then you can simply use a combination of AE blending modes on the resulting footage.
Very often, practical effects are the best effects. They're more convincing.
Sr. Promotion Producer
KCRG-TV (ABC) Cedar Rapids, IA