This got me so intrigued that I built https://github.com/vlameiras/tranquiled in order to have similar behaviour but in the screen itself. Nothing fancy, just curious to try it out!
In my case v.1 and 2 were apps with a similar on screen red dot like yours. Much smaller and first placed at the status-bar (like the cock ":" blinking) then floating on screen lower left corner.
Things got interesting and worked best for me after I remove the light from the actual screen I must look at to work. Hence the device use, and then later the heart sensor.
The key (I guess) is to make you brain see it but not you (if that makes sense?). Something like you looking at your screen but can still see if an Ant moves nearby or your phone shows a notification. Near your screen but not on it ; )
In any case, great little test, and eager for any feedback you can get.