Perfectly fine to drive an LED with a resistor straight off the mains, but watch out for the creepage and clearance distances. LEDs are not really designed as a mains indicator so providing enough insulation is the job of the designer.I didn't read all the responses but you don't really need a separate PS at all for LEDs. Just a 22K, 1/2 watt carbon film resistor in series with a standard 'modern' LED (older LEDs go POP) will light an LED just fine. That's for green and the resistor can be adjusted for other colors. No reverse diode needed, for green anyway. I'm looking at 6 of them glowing, wired up that way right now in a many year old power distribution center. Dunno about the flicker you need though. Trying to think of an AC circuit with a triac, a pair of N-Chan FETs driving it and a dual RC timer circuit. All 120 volt operation so the need to for an extra PS goes away.
Also, there are Tea Lights available for a few cents that have the LED flicker built in, so they look like a flickering candle...but they use 1.5 volt button batts. Could be jury rigged for your purposes to operate on 120 Vac though.
Just spit balling here.
(You can use a capacitor to avoid the heat generation of the resistor, which would be a much bigger problem for a 230V supply)
You can make a simple flickering circuit using a CD4006 shift register, a 4070 exclusive OR gate, a triac, three resistors, a diode, a zener and a capacitor. I'll draw it if you're interested.