+1 on too bright and I think the idea is very clever. BUT, I'd make the suggestion of having only a small cut-out area as clear with the lighting element visible in that space. Think more directional and focused light.
If your hands are holding the grips, then light beneath your hands is lost for the most part anyway...
Here's a pivot on your idea, use the inner most shoulder oft he grip as an "always" on LED marker light, and the outer end as an LED indicator section. 2 light elements, 2 different functions. Or the 2 elements could "blink" together. This inner blinking ring would also remind the rider to turn off their signal after turning.
Love the concept!