While using core text component 2.2.2 version, If you select paraformat (rte plugin). The options are going out of dialog space beacuse of that
it will start flickering.
I have creted a proxy component.
What I can do to adjust the options within the dialog boundries?
Are you trying this out in AEM 6.4 ??
I am trying in AEM 6.3 Service Pack 2.
robin.wadhwa Is this reproducible on a vanilla 22.214.171.124 instance with OOTB text component? If yes, I would suggest you to log a daycare ticket with steps to reproduce.
There are certain RTE/RichText - flickering issue of popovers in dialog that are fixed as part of 126.96.36.199. Hence I would recommend to validate the same once on it 
: Adobe Experience Manager Help | Release Notes: AEM 6.3 Cumulative Fix Pack
We are experiencing this same issue on AEM 6.4 SP 4. We have entered a ticket with Daycare. But it's been sitting there for several months. Funny thing is that is it not happening on our dev or test environments.Only prod.