Arduino Mega and External High Current Power Supply

So I've got a project in which I want to have 28 LED's all light up (high luminosity so 30ma each) They're not controlled, they're just on. I do realise this exeeds the maximum current arduino can supply if I power them from the board, while the board is powered by USB or power jack.
Each of these LED's will be connected to +5V and GND (through a resisitor).
I had an idea to build my own 5V regulator circuit using a LM7805, which can supply 1 or 2 amps. Then connect this to the arduino power pins, (GND and VIN) which means the whole thing can draw enough current.
My question is whether this will damage the arduino, I realise the max current is 500ma through arduino's own regulator circuit, and 40ma for each pin. I think by making my own regulator circuit and connecting to the VIN pin on arduino, it would bypass arduino's own regulator circuit.
I'm not sure if this will cause the pins to draw more current and damage the atmega chip, as in my project there's a ton of buttons and potentiometers/encoders connected to the inputs, which are also connected to 5V and GND.

The current draw form 28 LEDs at 30mA each would be a decent amount under 1 amp, so 1 amp is a good safe value to use for your supply current. Unfortunately the voltage regulator won't be able to output any more current than what it is supplied with, so if you hook the voltage regulator up to the Arduino 5V, you would still be limited by the Arduino's current output. In addition the voltage regulator required slightly higher than 5V input to output a steady 5V output, so in fact you would need probably at least 7V on the regulators input to get a steady 5V on the output. All these things considered using a voltage regulator for this purpose would not be feasible.

I would recommend using an LED light strips if your design allows, as they are more versatile, easier to manage, and can be purchased in a variety of colors.

You will have to use an external power source, the Arduino simply can't handle large amperage's. So you could use a wall wart adapter (Wall Adapter Power Supply - 5VDC, 2A (Barrel Jack) - TOL-15312 - SparkFun Electronics) that gives you a desired voltage: 5V at 1 Amp. Of course if later you think you might want more LEDs make sure to get a power supply that can output more current, maybe 2 amps. And really you can order them online in whatever voltage output you desire.

You can still use the arduino with npn or pnp transistors to turn the LEDs on or off on demand; make sure it is large enough to handle the current (TIP120 Power Darlington Transistors - 3 pack : ID 976 : $2.50 : Adafruit Industries, Unique & fun DIY electronics and kits). Then you can simply turn all the lights on or off at once. If you needed individual light control such as in a LED cube that would be a different story.

From 5V you can power red LEDs in strings of two, which would halve the total
current requirement. Alas other colour LEDs tend to have too high a forward
voltage to be strung together like this and leave enough voltage headroom for a
current limiting resistor.

I intented to use my own power supply unit - I forgot to mention this, ie. a wall plug that supplies 7-12V and 1A or over, connected to my own 5V 1A regulator circuit, and connect that to aruino's Vin/Vcc and GND pins.
I hope this will give enough juice to the LED's but also without damaging arduino, as all the components (buttons, pots, encoders etc.) will also be connected to same VCC and GND coming from the power supply.
I hope this makes it more clear.
I will also look into connected the LED's in series, since the forward voltage for these are 2.4V

operators123:
I intented to use my own power supply unit - I forgot to mention this, ie. a wall plug that supplies 7-12V and 1A or over, connected to my own 5V 1A regulator circuit, and connect that to aruino's Vin/Vcc and GND pins.
I hope this will give enough juice to the LED's but also without damaging arduino, as all the components (buttons, pots, encoders etc.) will also be connected to same VCC and GND coming from the power supply.
I hope this makes it more clear.
I will also look into connected the LED's in series, since the forward voltage for these are 2.4V

2.4V is too marginal, you need a reasonable headroom to allow for temperature
variation and device-spread.