Modification of Lionel 151 Semaphore

LED's will solve your heat problem.  There is a thread perhaps a day or two old since the last reply that has vendor information for what you need.

The voltage spike can be minimized by adding TVS across the power feed, and a low value resistor in series with the lead to the 151 after the TVS.  I'd use a 1W 10 ohm resistor.

John, thanks for your quick response! I went back and read some more of the TVS threads and think I have a little better understanding from the TVS threads. What I'm not sure of is your recommendation of the resistor in series with the TVS and the actual wiring sequence of the components. The 151, as I'm sure you're more than familiar with, has three connections with the center post being the hot feed for both the light and the solenoid for the flag and the post left and right of it the respective commons (I feed the flag/solenoid common from the track isolated common rail and the center hot post is my 14 volt accessory feed) If I connect the TVS across the center hot to the flag common post do I still need the resistor and if so would it connect in series from the TVS to the center hot feed post?  Additionally, if I am correct in wiring it this way would I now need a second TVS and resistor to connect across the center post hot to the lights common?

Lastly, I am changing out the light bulb for an 18 or 14 volt LED bulb with it's built in rectifier and resistor to take care of the heat problem.

Thanks again for your help!

The only function of the low-value resistor is to absorb some of the energy of the spike, it's a common filtering technique.  The resistor serves to limit the maximum instantaneous current flow of the spike while having minimal effect on the circuit.  The filtering is for the solenoid switching, we're just trying to damp the inductive kickback from the coil when power is removed.