Yes correct the diode won't limit the current directly however it will do the thing, since 4.2v and 0.7v add up to 4.9 volts. I use it myself, the LED backlight has a resistor but that is not enough, very bright, adding a diode, brightness dropped down to moderate levels. It's not always handy to have so many resistors around.
And in 10 years people will ask me if I'm not considering to retire to already...
By the way small power supplies + wires already have internal resistance of a few Ohms, not to forget the voltage regulator.