LED as 230V AC indicator
The types of AC powered LED drivers I've seen use a capacitor to drop the voltage/limit the current and to that extent it uses less "real" power.

The circuit you've drawn will (for normal 1.8V LEDs) pretty much dissipate 1W so it will get a little warm.

I guess the inability to pack some punch is the main drawback. The current into the LED is about 8mA every positive cycle so you don't get much light out compared to the heat.

I don't think there are any dangers (other than those you excluded)