That's nothing I can fix directly in SODE.
The sample PAPI light models are just a demo I made within a couple of minutes. It just shows the mechanism and is not intended to work in production sceneries.
Basically, SODE only injects/removes MDL files. What those MDL files represent or how they are built is up to the developer/modeller. So if you need distant light objects, you should read up on this topic in the modelling section of this forum. There are different solutions for this I think, LOD based or relying on the MIP mapping of the texture file.
My demo MDL for the PAPI lights use the MIP mappings technique, but of course this can still be optimized for distance/visibility...Check the modelling section for further info or post a question there.