Yes and you just describe a loophole.
You keep thinking about it as a loophole that will allow you to essentially "turn off" a light on Shabbos but that's not really what's going on here. The only problem with turning on or off an LED on Shabbos is building or breaking the circuit, in this case, since you are doing neither, it would be entirely permissible. It's not a loophole to do something that God intended for us not to do, the problem isn't to have a light on Shabbos, rather to create the light on Shabbos. The prohibition is to do the action not to not have the outcome of the action through some other way.