not being a smart ass but seriously - what's wrong with the electrical tape idea? buy 3m tape and it won't leave any residue behind and you'd only need a small piece to cover that part up.
i brought the dock with me on a trip and i didn't find it that cumbersome. it was nice to be able to keep the phone elevated while i had a water bottle sitting next to it, sweating all over the table.
plus, a benefit with the dock is how easy it is to put the phone on the charger since you don't have to pick anything up.
I have a much cleaner solution (IMO) than tape, and it is very reversible should they ever come out with an app that turns that LED off. Buy yourself a 19 cent O-Ring (at any hardware or auto-parts store), and put it around the plastic part of the USB plug. It'll block that LED no problem. Take your cable and the DROID in with you to experiment which O-Ring would work best.
I have the OEM dock, so it's not an issue for me. And since my boy came out with LEDs Hack, I'm a happy camper.