I've been looking into the microcontroller route and I agree it will work the best. It will allow a lot more flexibility later if I need to change, alter, or add some different features.There is a possibility that my suggested method could cause a flash when the button is pressed. I have no way to tell without testing it. If that was the case, it could probably be suppressed in the latching circuit you need to make it work anyway.
This might be an overly simplistic way to look at this but I was trying to compile a parts list. Not specific values, just the part types so I know what I looking for. I know I'll need the microcontroller, a switch/button of some kind, batteries and the harness for them, LED's, and any sort of connections that the application requires. I assume I still need the drivers for the LED's as well. Is there anything else obvious I am missing?