Ultimately, I was looking for an affordable way for teachers to construct something similar to this with their students.
I've determined that while I personally prefer the look, feel (and smell) of paper covers, using plastic bags is a viable option. The covers are durable, and students could easily use an awl (rather than a drill) to poke holes in the spine to sew on their LEDs.
The biggest concern that I have for using this particular structure as an artists' journal would be that the spine can only accommodate the addition of two signatures. With my current design, the signatures are being sewn onto the loops of conductive thread that are created on the inside cover when the LEDs were sewn to the outside of the covers. Over time, I worry that the conductive thread will start to fray, leading to malfunctions in the LEDs. This structure would be much more durable if there were some other loops to hook the signatures on to.
If I do this again, I will change the dimensions of the overall book to be a 4" X 4" square. I will also add ornamental loops to the spine that will serve as supports for extra signatures and use a lighter-weight paper for the signatures. I might also try to sew designs or a pocket flap onto the plastic using a sewing machine, before binding the book.
Here is a basic explanation of how I created this plastic book cover.