Most LED's genenerate very little heat. It depends on the MCD. The higr, generally, the higer the heat output.
That design will need to be redesigned though. Your 'switch' is impossibly small, along with the battery. The mattery will be quite a bit bigger than the LED (expecially a 3mm). If yo are going or cheap, a 3v button cell would be the cheapest and most redily available, but they are roughly 10mm by 3-4mm thick.
The 'switch' could be as simple as a push lever behind the battery that moves the battery forward in the tube and breaks contact with one of the contacts on the LED. However, the contacts would have to be designed so that they had some give to make up for production size differences. You could not actually use just the leads fromt he :ED and expect them to last any appreciable amount of cycles with a switch, as they would fatigue nd snap. A spring steel woud be better.
I would think a better idea would be to remove the battery from the design. The tube would be the LED, resister and color filter. Then use a bus to move the power from a central power source (or a few power sources depending on the size of the set) to the LED clusters. That would give several advantages.
- The power source could be a LI/gellcell battery (rechargable, portable, cheap)
- You could toss relays into the circuit so the lights cold be controled from a central location.
- Power could come from a cheap wall wart
- You would not have to go flip 50 switches between scenes. Just flip a single relay
- tons of other stuff I didn't think of
The main disadvantage I can thin of is the routing of wire, which is probably why you had this idea in the first place.
If you want to go on the single self contained unit, check out some model railroad shops. There are already lights like these for railroad cars and buildings, but most are smaller than this and get power from a different source from a battery, though I have seen self contained ones.