Phoenix lights - Again!

My wife and I were driving south on I-17, about 6 miles north of AZ Loop 101.  I noticed a formation of 4 or 5 bright lights in the sky to the south-west.  The lights were in what I would describe as a random pattern.  We decided to take an exit off the interstate so we could get a better look.  I ended up on a service road heading north.
 As I looked for a place to turn around I looked in my outside review mirror and noticed that suddenly all of the lights were in a perfect line!  We went about a mile down the service road, turned around and pulled over to the side and watched for a while.  One thing that we noticed when the lights were in a random group as well as when they were in a straight line, is that one or two would fade out, then slowly "fade" back into view.  It was a clear night (CAVU).  After about 10-15 minutes, they all "went out" in no particular order.
 Later, on the evening news, they were reported as flares, as high as 10,000 ft.  Which raises some questions: Why would they be dropping flares that high (flares are used to light the ground.  At 10,000 ft. they wouldn't do any good) and if they were dropped from a plane, how did they manage to drop the first group of flares in such a random manner?  Also, why would some of them fade out then reappear?