1) put the led on control side of relay, not switching side, ensure to provide enough power!
2) use a latching relay if you want set and clear buttons,
3) transistors are smaller but trickier to use and more components too, plus you would need FF
which controller are you hacking , and what kind of mods, just long presses?
4) a micro controller could do all this and more, then that would be it for parts, extra parts would mostly only include the buttons and leds interface ... programming would be required, a bit to learn at first but code would be relatively simple and easily upgrade-able as you go along.