If that green LED is physically connected with the power to the camera then that's plenty good enough for me. How could it possibly be bypassed with software? Even if a physical switch was added I'd still want them to keep the LED for the convenience of it.
I do agree though that a physical hardware switch is better, especially for the microphone. I see no real reason why Apple couldn't put a parts bin iPhone mute toggle switch on the side of a MacBook. I don't think it would look out of place.
To really trust the LED we should open the screen and check if the LED is actually connected to the power line of the camera. Of course we should check the hardware switch too.
Several models have shutters for the camera. There have been a few generations of Thinkpads where the entire camera slides inside the bezel. No physical microphone switch but there is a firmware level mic mute keyboard combination and associated LED.