the foam on the slot is to aid in cleaning the disc from dust as you load it in and also to stop stuff/debris from entering into the cd player mechanism.. It will work if you cut it away but you'll be exposing the cd 'sledge' to containments.
With your idea of removing an LED or two you may run into an issue as some of these work in pairs, so if you remove one its 'pair' will stop working as well..
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