I've resewn and connected the 5 LEDs, moving them over to the right significantly.

I had to move the wires around to make this work better, and they're a little worse for the wear, but are still solid enough to light up the LEDs.

Much better placement...

This is without any diffusion, and the felt just sitting on top, but you get the idea.

And adding the diffusion fluff and sewing it together...

Kind of hard to see the glow on this sunny afternoon, but it's much closer to what I was thinking.

Now I just need to reformat the design a little bit. I need to take out some details - they're too small to render in felt. And my intent was to have the "spikes" on the front piece and the back piece offset each other to give it a little layering dimension - but that's going to take a bit more precision in my cutting than I applied to this version. And I just used a sharpie to make eyes, but I'll probably embroider them for the final piece.