I use the LED flickering tea lights. I change the wimpy LED to a 10,000 mcd and cut in a 4AA battery pack. Some are really easy to hack. Use some small colored diffusers to spread the light around. If you use a spray-on glass frosting coating it'll look good, too.
Dollar Store has some that cycle through 3 different colors. That'd be kinda strange for a lantern, though.
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