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You should do an instructable on that technique, I would love to see it in action.
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You are correct that this is basically reverse electroplating, as the current moves from one side to the other the ions break down the bonds in the metal and pull it into the water. The metal on the other side doesn't matter, I use a plate of steel and it works with every metal I've tried.I have done this with steel, brass, bronze, and aluminum so far.It shouldn't mess with the temper because it doesn't raise the temperature of the steel to any of the critical temperatures.
I've done this with a car battery charger but you can get way too much current going through if the piece is large enough and it will etch way too fast and the current agitation can pull of your resist.I now use a plug in 500w transformer that works really well.
I think it would fly because it is low voltage and the codes concerning low voltage installs is pretty lenient. You can have exposed wire for other kinds of 12 volt lights like Malibu or low volt track lights so I don't see why this wouldn't work as long as the LED strips them selves are UL rated.