Put numbers to that degradation. A maximum Vb voltage change for any MOV is 10%. A voltage change this small means no visual indication (ie no burned MOVs). A greater voltage change means a catastrophic (unacceptable) failure (ie fire) often seen with undersized power strips. Also called thermal runaway. bud has described that catastrophic failure as if it was acceptable.
If an MOV threshold voltage changes more than 10%, then that protector was grossly undersized. And a potential fire. Only failure mode also reported by the OP's indicator light (with 2K resistors) is a catastrophic (unacceptable) failure. That light cannot report the other and acceptable degradation (a 10% voltage change).
An MOV manufacturer's datasheet describes how to test this normal (acceptable) failure mode. Note the numbers. 10,000 times? If an MOV is properly sized, then its voltage does not change by 10% after many surges. An application note from Littlefuse says same: The unacceptable and catastrophic failure mode (thermal runaway) must never happen. As in never.
A fire threat does not exist when the protector is properly sized so that degradation (voltage change) is well less than 10%. Numbers say no appreciable degradation after many surges over many decades.
MOVs with burn marks or any other physical deformities seriously exceeded MOV manufacture's requirement for safe operation. When undersized and when its fails catastrophically, then naive consumers recommend them as 'one shot' protectors. Failing prematurely (being undersized) promotes sales.
An indicator light (with 2K resistors) originally discussed by the OP only reports a thermal runaway - due to being undersized.
bud's expert says adjacent (point of connection) protectors can even make appliance damage easier. We, who did this stuff as engineers for decades, have identified similar damage created by an adjacent protector. Martzloff says in a conclusion to his 1994 IEEE paper:
Critical is for MOVs to be properly sized so that degradation (voltage change) remains less than 10% after numerous surges. (IOW earth a properly sized 'whole house' protector). Critical is protectors distant from appliances and low impedance (ie 'less than 10 feet') to single point earth ground. These superior, properly sized, and less expensive solutions are provided by manufacturer's with better integrity. Then hundreds of thousands of joules dissipate harmlessly outside the building.
Energy that dissipates harmlessly outside does not change MOV voltages by more than 10%. Does not create thermal runaway. Properly sized MOVs must not exceed the 10% voltage change after those 10,000 surges. Protector voltages become more than 10% lower (and can suffer thermal runaway) when undersized.
The 2K resistors were a less threat. MOVs in that APC protector are undersized. So undersized that the protector must be protected by properly earthing a 'whole house' protector. Because thermal runaway is the reason for so many house fires.
Disclaimer: I am giving you a quick/rough answer, which SHOULD NOT be used when designing equipment etc. I would have to spend much more time researching this, performing bench experiments and possibly referring to experts in this and other fields.
I think there may be some confusion over the usage of the term "Thermal runaway".
The MOV wiki
Also called Varistor gives the following quote:
In general, the primary case of varistor breakdown is localized heating caused as an effect of thermal runaway. This is due to a lack of conformity in individual grain-boundary junctions, which leads to the failure of dominant current paths under thermal stress.
I am taking the "thermal runaway", in the above quote to mean that a tiny part of the MOV, so happens to have a slightly lower "trigger" voltage, than the rest of the MOV.
This means that when a 'surge' hits the MOV, the tiny (slightly reduced trigger voltage) section, begins to absorb, almost ALL of the incoming surge.
As this progresses, the same tiny section of the MOV gets, rapidly hotter and hotter, and its resistance gets lower and lower, i.e. you get a tiny section, where 'thermal runaway' of that tiny section, has caused the tiny bit to get extremely hot, and "burn away".
So the use of the term 'Thermal runaway' is trying to describe the "wearing out" mechanism of MOV's, NOT a dangerous MOV overload situation.
A non-UL1449, very poorly made surge protector, with a tiny MOV, when given a HUGE surge, may indeed have a (potentially dangerous) MOV overload and possible fire hazard. This can also be called "thermal runaway", because of the rapidly reducing resistance, as the MOV temperature goes through the roof. (Which reminds me of second breakdown in bipolar power transistors).
But this type of "thermal runaway", should not be confused with the "thermal runaway" nature of MOVs wearing out by repeated surges.
In the ideal world ALL surge protectors would have really big, high rated MOVs, such that they could withstand 10,000's of big surges, suffering from little or no damage.
But in practice, this would make surge protectors more expensive, quite possibly so expensive that most people would not be interested in buying them anymore.
Therefore the realistically priced surge protectors, which many people buy, have smaller MOVs, which don't give the huge lifetime of big MOV surge protectors.
But that does not necessarily mean, that with the correct, safety improving UL1449 techniques, all or most of the safety, can be designed back in to the standard sized MOV surge protectors.
UL1449 might mean that the MOVs parameters (voltage rating) changes by more than the 10% datasheet value, and hence can be declared faulty.
But if UL1449 has got sensible safety features built in, such as thermal protection, fuse(s) and safety indicator lights, then the situation can still be safe (assuming the UL1449 design features work ok).
One thing that does make me a bit concerned is that the user is expected to regularly check the 'safety' LED lights, so that they know when the useful life of the surge protector, is used up.
My personal view is that many users will either NOT realize they need to regularly check the lights, or they will simply forget or not bother to check them.
I.e. I would prefer UL1449 surge protectors to NOT rely on the user regularly checking these (led) lights, as part of the safety case of surge protectors.