Your going to find that most of the folks here aren't the biggest fans of leds on arcade cabinets, at least not over doing them like that.
My 2 cents. It would seem to be the holy grail to be able to have led t-molding that was diffused properly, but I can tell you that cutting that groove and filling it with epoxy is just not worth the time and effort it would take to do that. Its nice to dazzle the eye a little with leds but at the end of the day it should be about the games, not about the spectacle. Beside if the leds ever die your kind of stuck with them being that they are now buried in epoxy...
There are many other ways to use leds in a more subtle way. Such as putting them under the cabinet and/or under the control panel to provide a subtle glow. Having leds lining the entire cab and especially if they are flashing like that is simply a distraction.
I'm working on a driving cabinet right now, I have leds under the cabinet and an led light bar under the marquee. This to me is enough to provide some color and visual interest, but not distract you from actually playing game. which is what this hobby should be about.