I've just learnt to live with it to be honest.
I have found a workaround though:
If the LED continues to flash after having replied via the pop up, go into any conversation thread, click in the reply text box and wait until your keyboard pops up (I'm using SwiftKey btw), then long press on any conversation in the thread to bring up the message options list. Voila. The LED stops flashing. Hopefully. For me it does anyway...
Post back with your findings, mate.