There are two things to protect from theft here: the car and the contents. While a flashing LED might be considered as a suggestion of a nice stereo (or a sat nav or other valuable contents) stashed onboard, an alarm also sends the message that the car is not an easy target "it's alarmed and immobilised, go find an easier one"!

I take your point though; if the LED can mimic a factory fitted alarm then so much the better. Perhaps this contributed to my success with fitting one - I tried as best I could to make it look original even though it wasn't available as a factory option.