its video cameras can sometimes be blinded by the sun when trying to detect the color of a traffic signal.
So can people. One possible solution would be radio signals in every traffic light to indicate the light's state. No signal and can't see the light? Stop the car and tell the driver to take over. This would be useful for eliminating confusion when you have multiple lights as well, so it might be worth pursuing.
That said, the simpler fix is to use a higher quality camera with better lens coatings. I can't remember the last time I saw lens flare that blew out a picture to the point that it was truly unusable except when using old camera gear with uncoated lenses. For additional robustness, put more than one camera on the front, pointed in different directions. That way, lens flare should never be a problem, in practice. (Lens flare tends to be angle-specific, and the sun is in one spot, so if a lens at one angle is in a position to flare badly, a second lens at a different angle probably won't be, assuming your lenses aren't old, uncoated nightmares.)
it can't tell the difference between a big rock and a crumbled-up piece of newspaper
Neither can people, reliably, unless it is blowing. Whatever you see in the road, it is best to avoid it. :-)