Hi Robert,
In your first post you say LED ON for 500uS, OFF for 500uS but then you say you want a period of 1s - that's a difference of $03E8 times.
I know you didn't want to do it with an normal interrupts but I'm going to suggest a simple timer interrupt anyway.... At such low frequencies (even though you're probably not going to get 500ms interrupt period in "on go") the interrupt processing will have very little impact on the overall performance.

/Henrik.