I think having the LED inside the hand could be distracting for the rider, and the light dissipates by the time it gets to the end, where it's needed for visability. I would suggest having the LEDs in a protruded end(about the size of handlebar weights).
Most states that have a safety inspection require lighting to be DOT approved. We had problems when I worked in a Honda dealer, selling aftermarket turn signals, because they wouldn't pass inspection because they didn't have the DOT approval markings. Some inspectors wouldn't check, but state troopers would ticket if pulled over.
Over all, I like the idea.