Using interrupts to strobe an LED
Found a solution, some variables and config registers changed:

TMR0 prescaler 1:64
SECOND = 440
MSECOND = 40

if (TMR0IF){
TMR0 += 217;                         // approx 2.5 msecs
TMR0IF = 0;                          //reset overflow flag

    if (++ledOffTime &gt;= SECOND){         // Every second 
        ledOffTime = 0;                  // Clear off time count
        ledsOn = true;                   // LEDs are on
        GP4 = 0;                         // Bicolor LED
        GP2 = 0;                         // Turn LEDs on
    }
    if(ledsOn == true){                  
        if(++ledOnTime &gt; MSECOND){   
            ledOnTime = 0;              // Reset on time count
            ledsOn = false;             // LEDs are off
            GP4 = 1;                    // Bicolor LED
            GP2 = 1;                    // LEDs are off
        }
    }    
}