I just finished a DIY night light LED project. I uses normal LEDs (not the in famously expensive "high power" LED's which give an unatural spotlight effect), and coated the connections with aquarium sealant. Theres 5 running in parralel off 2 AA's, I fitted a rheostat and a 630ma fuse onto the live incase of a short, although, at 3V, a short isn't a huge problem.
Thanks,
Chris