Got mine to work:
here's what I did, I'm not sure all of these steps are needed, but I'll throw them out there just in case they can help.
1) turn off Mighty Mouse
2) Remove Batteries (replaced with new ones because I couldn't remember how old the batteries were)
3) turn mighty mouse back on
** at this point mine was still blinking as before
4) Open System Preferences
5) Open Bluetooth Preferences
6) Click the "+" sign to add a new device
7) Click Continue
8) Click the radio button for "Any Device" NOT "mouse"
9) Click Continue
* My mouse actually showed up as an available device at this point.
10) proceed to finish the setup process
* Mouse started working
Hope that helps !