Big problem with your drawing. LEDs aren't rated for 120x1.414 V reverse voltage. The only thing that keeps the reverse voltage sane on LED1 is the fact that LED2 is functioning and keeping the voltage at 3v. If LED2 has a problem, suddenly LED1 is looking at 120V peak reverse current, kaboom.

Series each LED with a diode good for 120V peak reverse current. (120x1.414).

I wouldn't do that in a production model. LEDs aren't rated for 120VAC (170V peak) reverse voltage. The only thing that keeps the reverse voltage sane on LED1 is the fact that LED2 is functioning and keeping the voltage at 3v. If LED2 has a problem, suddenly LED1 is looking at 170V peak reverse current, kaboom.

Series each LED with a diode good for 170V peak reverse current.

That said, I plan to do exactly this with 75VDC, which is even more feisty than 120V AC, but reverse current is not an issue in that case.