I made 2 taillights from information gathered at candlepower forums and from the electronics threads on this site. If you can follow directions and solder itty, bitty pieces you can make some awesome lights. My taillights use cree star emitters and buck puck circuit boards available from Deal Extreme and other places. Everyone comments on my lights. They are bright. The circuit board determines the amount of modes your light has.
Around here we have twisty hilly roads, and I can hear cars comming long before I see them. I can watch in my mirror as cars come into site of me, they almost invariably hit their brakes as soon as they see my light. I prefer a rapid blink mode on my taillights because it makes me be seen and it gives longer battery life. Mine run off 4 AA rechargeables.
I only make taillights, because a really good taillight is very expensive - like $100 +. You can make one as good or better for a fraction of that cost. I don't bother with headlights because a super bright light from Deal Extreme will only set you back $30 or so.
If you need more particulars let me know.
I've never heard of using a pot. They waste energy. Circuit boards provide all the modes you will ever need.

People have been known to drink and drive around here. It's not uncommon for cars/trucks to come up behind me and almost come to a stop when they see my taillight. My theory is that they have been drinking, and when they see my light they think I'm a cop so they panic until they can make out that I'm just some guy out for a night ride on his bicycle. My neighbors have gotten used to me so it don't fool them.

Do make some lights. The results are well worth it and you will save some $$$$$$. You will learn a lot, too.