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Thanks for asking.
1. If you say its red/blue, this means that you can see them. You 
can't see light in the infrared range. So it will most likely not be 
usable.
2. I can't give you any physical specifications myself, but there's 
some info over at wiili.org at http://www.wiili.org/Wiimote#IR_Sensor 
- the entire site is a good read for every interested in the Wiimote 
hardware's capabilities.
That said, IR LEDs are sold for around 1,50 Euro / piece (although my 
feeling is, this is heavily overpriced, it's still affordable) and a 
circuit to power them through a block of rechargables should be 
really easy to do. Have a look at the pictures of this test:
http://gear.ign.com/articles/751/751096p1.html
To me, it looks like someone drilled holes in a cable bar and spent a 
few minutes to solder the IR LEDs, resistor and battery connector 
together. The expenses should be pretty low for this construction 
provided you already have the equipment to solder the elements together.
Your worries are justified, though. Anything real hot could be 
interpreted as IR light source. It has to take the form of a spot, 
though. A candle does look to Remote Buddy like this:
http://www.wiili.org/index.php/Image:RemoteBuddyConfiguration2.jpg
You'd get two spots for two IR Leds, three for three, etc. 
Nonetheless, whether the venue itself does cause problems is 
something you can only test out. There's no general answer to this 
question.
Button presses will work reliably though as *all* data from the 
Wiimote to Remote Buddy is transmitted via Bluetooth. IR is only used 
for position tracking inside the Wiimote. The chain here is like this:
IR light source -> IR sensor of Wiimote -> chip inside Wiimote -> 
Bluetooth -> Mac -> Remote Buddy.
Best regards, 
Felix