I plan to be making an led binary clock. The LEDs will be mounted (with holders) in a piece of wod behind the plexiglass. The space between the mounting plate and the plexi will be between 1/2 - 1". So, in your opinion, what would look better; plain or frosted?
are they decorative holders? and is it nice looking wood?
One crucial question is what sort of LEDs you're using. If they're diffused ones, you may do better with "plain" (but probably a darker "smoke" color to improve contrast).
If they're "point source", it'll probably look better with a frosted piece: the LEDs will show up as somewhat-diffused spots on the plastic, with good wide-angle visibility.
If you live in/near a city, there's probably a plastics supply house, and they often have scrap bins where they sell the leftovers from custom orders at deep discounts. I used to go there often when I lived near one, and accumulated lots of samples for experimenting with. Usually at a quarter or less the full price. It's a great way to learn how to cut/drill/sand the stuff, and to learn what kind is good for what purposes.
They are high brightness small point leds.
And the wood is going to be stained wood. I forget the exxact name, but it will be stained brown or black.
Frosted. deffo.
Have you tried putting your LEDs behind a frosted plate or even a slice of paper at the same distance as your project?
I have found the non-diffused LEDs make multi-colored spots .. not a solid color when not "right on" the diffused surface. You should try this asap if you have not done so yet. This will assure your design works.
You may have to add more diffusion to the LEDs to get rid of the colored spots or change the design to have the LEDs almost touching the diffusion panel (a good one). I have used hot glue and a small cut off an acrylic tube to make diffused coverings for non-diffused LEDs, just in case you try all else and still see a multi-color dot instead of a solid color dot.
If you can not find frosted plexi around or it proves ineffective you may consider glass. A stained glass supply store should have frosted glass and often a scrap bin as well. I use frosted glass even with well diffused LEDs. Glass does not scratch as easy and looks great.
Have fun
Non-frosted LEDs will make a dot whatever you use to diffuse them (unless it's very good or a bit of a distance away).
Even frosted LEDs can produce a bit of a dot but much less.
If the distance is not very great then you might want to diffuse it twice, frosted plexi or glass is normally only frosted on one side so you still can get a 'dot' on it. I have used double sided frosted plexi before which works much better, then it diffuses it, the slightly diffused light then passes through 3-5mm of acrylic before hitting the top diffused surface.
Not sure if you can buy it, I have just done it with a laser cutter before. Etch one side at a low-ish dpi and then the other side. Different powers/speeds/dpi/focus settings have different effects. Takes a bit of experimenting. This also takes ages as the laser marks ~0.1mm in each pass so if its a large area, it has a lot of passes to make!
Mowcius
Well, THIS is the plexi that I plan on using. It looks pretty good quality and looks like it diffuses pretty well. What are your thoughts?
I think i am more partial to clear, frosted (or super dark)always says "your hiding something" to me
but to each their own, if you want frosted that looks like it would do the trick nicely
Well, I think that frosted would be better. I want the leds to be not so direct... Like viewable from an angle and not to just put dots on the wall accross from it. And the holders are reflective metal so they partially diffuse and focus the light at the same time, so it won't blend much if at all
That acrylic looks good but I would still go with diffused LEDs too.
Mowcius
frosted (or super dark)always says "your hiding something" to me
Sometimes hiding stuff is a good thing, it adds to the flexibility of design.
Sure, for some things it's appropriate to have the guts on display... but for a clock? If you're not after a retro look, then you'd not really want the LED holders on display, no matter how cool we think they are.
I'm watching this thread intently, purely from a design aspect... and LED's on display just won't do for me 
Yeah, I think I will sand down the leds a little for a little more diffusing.
Well, I know I started this thread about the plexiglass, but I think I will also turn it into a sort of update thread on my progress... So...
Update: I just finshed drawing the cutouts on 1:4 scale. Basically I did that to know if all the pieces can be cut out of one piece of wood... Luckily they will (This wood is NOT cheap!). If your wondering how I am going to lay this out, here is a little diagram:
Alarm ON 8 8 8
Alarm OFF 4 4 4 4 4
A.M. 2 2 2 2 2 2
P.M. 1 1 1 1 1 1
Here is a list of some of the supplies I will be using:
OK, here is what I am hoping for. I found this picture on Google Images, and it looks like what I am hoping for. I plan to have red, green, and blue leds, as stated in my previous post, but this shows the basic idea.