The "fade, come back, fade again" behaviour is exactly what we see in the SpaceX footage as well (splashdown starts at 1:00 mark):We see it fade and then come back and then fade again, like the glare is being obscured as Mick demonstrated with his light/book demo.
Saying it splashed could just be a mistaken observation based on just seeing the FLIR footage 1st time in real time.
When the object re-emerges it is covered with water so not very visible. Once the water subsides it becomes more visible again. I don't think it will cool down in just a few seconds.
The fact that they were able to "mark bearing and range" tells me they had more sensors on the object than just FLIR.