Flexo,
Welcome to the forums. The dropped connections every once in a while is not a problem with your GPS receiver but rather with the OS on the Blackberry. OS's from 4.2.1 and up have had issues with the Bluetooth programming in the OS. The same Pearl with OS 4.2.0 does not have any issues. It's something RIM did to the OS that hasn't been fixed yet. Hopefully, we'll see this fixed soon.

I don't quite understand your question about the led status light on the Curve. It should flash blue (unless you disabled the bluetooth led in bluetooth options) when the GPS is connected. Also, it will only flash blue when you are using an application that asks for the GPS info.