I think you're missing the part where Shadow Covenant does twice as much up-front healing as the spell should because it has the healing absorb. In your example, Flash Heal wouldn't actually be topping the target off.
The healing absorption is only half of the effective healing, so it's not like spamming it on a full health target creates a healing absorb.
And you do apply this to a couple of other spells actually, namely Light of the Martyr and Spirit Link Totem. They create damage that has to be healed instead of a healing absorb, but it's the same thing, just easier to track in logs because they are damage events. We saw very similar things with LotM before Kihra took that into account where Paladins would be doing double everyone else's "healing" because they were spamming LotM but then had to be healed themselves to counter the damage it was doing to them.
The only unique part about Shadow Covenant is that it doesn't actually do damage but instead is a healing absorb, which is the same thing if the healing absorb does not time out.