There is a long discussion over in the Lanterne thread about what the N900 flash LED can do. In a nutshell, yes, it is dimmable (in steps; 8 or 32 depending on mode).

There is also a long discussion in the same thread whether it is a good idea to leave the LED on for any extended period of time. I personally would not risk leaving my LED on for "30 minutes to 2 hours", although the idea is not as crazy as it souds. I've just tried it: it is dark here as I type this and the LED seems bright enough to be actually useul for the purpose.