So say soldered an inch from an led and a large piece of plastic, with others 2 inches away doesn't count?
It depends on how well they get cooled. I've just looked up the datasheet for some 0.5W metal film resistors and the rating was for up to 70C ambient temperature. If there is good airflow and the resistors dissipating nearly 0.5W are 2 inches away from each other and from anything else generating heat, then it will be OK. But if you are unsure, or if the LED is for a warning light or other critical function, then go for 1W resistors instead. You will still need to make sure that the heat can escape.
I used to fly a light aircraft that, according the the schematic, was supposed to have a 50 ohm power resistor in the alternator failure circuit. The manufacturer had used five 220 ohm resistors in parallel instead instead. From their size I would guess they were rated at 2W each. The resistors had about 15v across them continuously. After 3300 hours of use, all the resistors were charred and some had gone open circuit. They were dissipating only 1W each which must have been within their free-air rating, but because they were in a bundle, they were heating each other and getting too hot.