Thanks for the help dropshipbob! I went today to have the "negative" rings cut, and will use those as a mask because the vinyl stuck so well. Then I'll paint. I also bought transparent blue paint to check it out as well. Looks like all in all about $13 for the frisbee, $12 for the vinyl (whether used as the rings between the light or the mask for the light after painting), and $6 total for the white paint (krylon plastic fusion) and transparent blue paint (testors).
So if you can mask worth a dime (I can't), you're still looking at around $20 total for the project.
As far as flying, yes it still does! Along with being a cheap, quick project, that was my main objective along with the electronics being self contained.
I'm also toying with the idea of putting at least 2 more leds in the housing underneath.