So I thought of both those things. ChatGPT told me something similar about the reflection:
In your photo, the only real LED is the bright green one on the front of the case.
The “second light” you’re noticing is actually just a reflection on the glossy lid interior — the plastic surface catches the LED and creates a small mirror-image glow.
This is very common with AirPods Pro 1 cases because the inside of the lid is smooth and reflective.
But in my situation, it's a pretty distinct light so I'm not sure how it would be a reflection. Also, the bottom light comes on separately from the top one when it's plugged into a charger, i.e. the top light does not appear to be lit when charging.
I also checked the serial number on Apple's "checkcoverage" website, and here's what it told me:
We’re sorry, but this is a serial number for a product that has been replaced. Please check your information and try again. If your information is correct, you may need to contact us.
So that might have something to do with it, but not sure what.