I remember attempting this a long time ago...
I ended up with a rather complicated script that kept replacing the torch every time it ran out, but I believe there was a noticeable transition, and a sound effect, every time a new one was added and equipped, and I had to make it so that the torch couldn't be dropped, or the script would place a new torch in your inventory, thus duplicating it (whether this was necessary or due to my limited scripting ability at the time, I don't know).
I eventually came to the conclusion that the best way to go about it is to do what Bethesda did with the Pilgrim's Lantern, and just fill the "Length" with 9s, i.e. 99999999