Our phones probably use 2mm LEDs for the mute button. An LED that size draws at max 5mA. Our Touch Pro 2 batteries can supply 1350mA for one hour. That means your phone can power JUST the LED for 270 hours straight.
The average discharge rate on the TP2 is about 175mA when in use. Assuming your phone stays at that discharge rate, the LED only reduces your battery life by 1.1429%
So don't worry about it, you shouldn't really be able to notice an impact on battery life from that. The reduced life you're experiencing is probably due to the water damage