Where did you get the idea that it was harmless? Certainly even a non-red flash would have killed a great many on the Citadel. And all this despite blast not propagating well in a vacuum. The presidium ring was shattered in the red ending — not sure about blue (control) or green (synthesis). There were even great chunks taken out of the wards — as can be seen in the extended cut's finale. The flash color doesn't matter, from the point of view of a shipmaster wondering if discretion might not be the better part of valor, since he won't know what any of it means till much later. He or she just knows it's time to run.
We know the red flash paralyzes tech, remember. The only reason we can assume there were any Citadel survivors at all is the developers said so in tweets and on the forums (reminding players that even in ME1 you can see locally generated atmospheric retention fields). The blue or green flash would have scared the fleet just as badly.
As for ships, EMP or similar field effects are likely, even if nanoscale logic elements are preserved. They might have been mitigated in the control ending but that's still one hell of a bang. No-one knows what the Catalyst promised Shepard. So ships would depart the system regardless.
From a technical purist's point of view, it's true that FTL to a nearby star won't work — if only because at around 12-14 light years per day, fleet units would take an hour just to get past Earth's Oort cloud, and the flash would catch up long before then.