Parallel Incandescent Bulbs and Resistors
LEDs require a certain minimum voltage to turn on at all.  For an infra-red LED this would be around 1.5V, maybe a little less.

With the button open, almost all the voltage is across the lamp.  The peak voltage across the LED is only about 0.33V, so it doesn't light at all.  I have used the peak voltage here, not the RMS voltage.  The peak is about 1.4 times the RMS.

With the button closed, the voltage across R2 and D1 combined will be about 8V RMS.  The LED will take about 1.5V, leaving the rest across R2.

So long as you ensure that the voltage across R2 and D1 combined is well below 1.5V, you should be able to adjust R1 as desired.  Be aware that the peak voltage of 8V AC is about 11.5V.

You really should put in a reversed diode in parallel with D2 to protect it from the reverse voltages.