Slow decay of the signal to the LED is the problem - assuming that the LED itself does not have any such limitation. I wouldnt know on this.

But defenitley you can improve things by trying out a real switching transistor as has been suggested already. In fact I had come across a tip to speed up the switching OFF time of a transistor with a diode... Let me get it for you - will have to locate it.

Unless this decay issue is addressed I do not know if a blanking cycle will help as has been suggested by Steve, eventhough it is a good concept.

Raghu