I have overloaded insteon switches before. What you are describing is different. It actually sounds as if the off microswitch is jammed. This would explain why it fades off after you turn the switch on and when the load flashes and the led starts blinking means it is going into manual linking mode. Same thing would happen if you held the on paddle for 10 seconds. Now the one thing that is odd is you said 3 switches all did this. That is too much of a coincidence unless smarthome has a bad batch of switches. If the switches work normally in a different location than something is wrong with the load or perhaps the wiring.