Headlights are too high towing, getting high beam flashed.

Adjust the hitch not the lights. 700 pounds, if that is accurate is nothing for a 250. If its dropping as you say an inch and a quarter, then you either have way more hitch weight or your hitch is horribly mis adjusted. A properly adjusted qualizer hitch should place about equal amount of weight on the front, rear and trailer axles. I think first thing get your truck weighed, then truck and trailer hitched. Adjust hitch to load more on front axle, less on rear axle.