You're pointed in the right direction mate. You need to bounce the light for it to glow the way you want. The neon would work if you could mount it further down (read as inside) the cowl. The amount of light reflected back up the cowl is going to depend on the finish (mirror/matte) inside the air channel. Only problem is it will be partially blocking/disrupting your air flow. The LEDs would be nice as you could mount them from the underside so they are flush within your air path. Of course having said that I don't know how well they'd stand up to the engine heat.
Either way don't forget that even if you do manage to soften it to a glow that won't blind ya you'll still be reflecting that red light off your front glass which may make you popular with the boys in blue.
Keep us posted if you get something noodled out. Curious to see what it'd look like.
