Would a Mercury switch even exist in a "to be mounted sideways with receptacle faceplate" format ? After all it have to be installed in a specific position, or else it wont work

No. That is the other reason why I am sticking to a snap action switch. Since I don't really want to complicate things, I will unplug everything before operating the switch and hopefully everything will be fine.

No it wont. as you still dont know anything about how good of a contact you have when the switch is in the on position and not touched. It may be on the edge and one moment suddenly just start arcing all by itself

And if you unplug everything why you need the switch ?

If you keep it only to control the light, then it probably does not matter with a small LED indicator... With the current it draws it wont be able to make much arcing even in an actual bad connection. But you may run into a different Alola, that the switch have some leakage in it so it cant switch the LED off

In theory, do you mean that a standard snap action switch should be able to withstand a momentary surge of 70-100A for a few milliseconds upon closing the contacts ? This is of course referring to a very good switch that does not have any defects. If so, I should not worry that it will ruin this one as well... Unfortunately they cannot be inspected as they cannot be opened. I know of some snap action switches that have switched (with a lot of cycles) HID ballasts and still work quite well.

As for the lamp, the primary purpose is to not forget something is charging. My wife and I both bring rechargeable devices to and from work every day and sometimes they need a charge up at home. A conspicuous pilot light is necessary to avoid a forgotten device. If the light were on 24/7 (which would use negligible power with LED) it would become a standard sight and not serve as a reminder that something needs to be dealt with.

The second purpose is a night light should the need arise to get up in the middle of the night.

I know, my life can be complicated by mundane things...

I meant this :

"I will unplug everything before operating the switch and hopefully everything will be fine" ----> Unplugging them to prevent arcing in an already defective switch ? ----> It might arc at anytime anyway ----> no it wont be ok

Ash is spot on, arcing results in one of two things failure or fire, if the switch is arcing, don't risk it, replace the switch, or turn it off at the breaker and don't use it until you do replace it, even if you have fire insurance it's not a whole lotta fun...

@ Ash, If the switched mode supply didn't use a diode bridge to convert AC to DC before switching they would behave like a transformer when turned off but the diode bridge stops that, this is also why they don't care if you feed them 50/60 Hz or even 400 Hz input power..

"Switch mode power supply" always use some form of rectifier first. The main converter allows only one polarity supply, there is no other way.
In principle all SMPS's convert first the low frequency AC to DC, then a switch (or switches) turn that into a high frequency AC, which then passes the transformer to the secondary. It is just the high frequuency operation, which allows the transformer to be very small for the given power, so exhibit very low losses. Plus the switching may modulate the timing, so by that "measure" the energy transfer, so in that way keep the output stabilized without any principal losses.
But because all available power switch components are able to work only with one polarity, all that always must start from a DC, it can never work directly from AC.

I meant this :

"I will unplug everything before operating the switch and hopefully everything will be fine" ----> Unplugging them to prevent arcing in an already defective switch ? ----> It might arc at anytime anyway ----> no it wont be ok

I think we missed something along the way. The defective switch has been replaced by an identical model that is new old stock. If the arcing happens again, I will have to reconsider this setup, unfortunately.

Ok so its about preventing damage fom the new switch. The phone chargers wont do anything. The laptop charger if its inrush arc is significant might degrade the switch over very long time - To prevent that either unplug it, or use a relay after the switch

A socket switch should be rated at 16A anyway. With that I doubt it would have any issue with laptop chargers or similar devices, where the inrush current is in the 30..50A range, but just for few ms (charging the capacitor). Similar curents you may expect from any more powerful vacuum cleaner or similar motor tool, but with time duration of 100's ms or so, plus then the operating current is not the 1..2A like with the chargers, but in the range of 5..10A.

The problem with swelling plastics is really with the unsuitable plastic used there in the first place. And by that I do not mean the switch material, but mainly the wire insulation materials (mainly the PVC's are susceptible to these problems, as the "native" PVC itself is hard, brittle substance, so you need the additives to soften it to make it usable for a cable insulation; and there are many substances in use, some well behaving but expensive, some cheap but very nasty for anything around). The plasticizers from the cable insulation tend to diffuse/distill from the cable to other surfaces and then attack them chemically.
That means not only some slime on the Bakelite, but weakening of other plastics, but as well metal corrosion and so on.

The release of these chemicals from the cables is either caused by overheating them (then the long term load may be a factor), or just at any time with really c****y cables...

Ok so its about preventing damage fom the new switch. The phone chargers wont do anything. The laptop charger if its inrush arc is significant might degrade the switch over very long time - To prevent that either unplug it, or use a relay after the switch

Yes, exactly. Sorry for the confusion.

Surely if you have to unplugsome chargers before operating the switch that means the switch is a bit pointless right? Secondly if there is arcing please be careful this can damage switch mode PSUs I had an old TV that had a damaged PSU because the switch arced. Thirdly can you really put an LED across the mains as an indicator?

With a suitable resistor and reverse diode you can use a LED at any voltage. Additional diode better be put in to cut down the power draw of the circuit (and respectively dissipation on the resistor)

Some circuits skip the reverse diode and leave in only the additional one. so basically the LED, the other diode and the resistor all three in series. This is commonly found in indicators and guide lights on switches. But this circuit is prone to cause failures of the LED from transients, where a reverse diode prevents such damage

Surely if you have to unplugsome chargers before operating the switch that means the switch is a bit pointless right? Secondly if there is arcing please be careful this can damage switch mode PSUs I had an old TV that had a damaged PSU because the switch arced. Thirdly can you really put an LED across the mains as an indicator?

LED on mains, Yep it's easy skip the whole resistor part though, if you running them on AC you can use a non-polarized capacitor in it's place, which will act as a resistor on AC, only you don't have the heat to deal with and they are more efficient, you need a 0.22uf 630 volt Cap and one LED and a 1n4148 diode, or you can use two LED's wired in reverse to each other in parallel  ( AC goes both ways ) and wire them in series with the cap across the mains to drive them across the mains 230 VAC (well 220 to 250 really) and if you hunt around for caps you can get them small enough to fit the leds and capacitor inside a light switch and use them as a pilot light if your good..  For good measure I would add a 4.7 K resistor like a 1 watt to reduce any inrush current to a safe level, and if you do it inside a light switch you can power it from the switch contacts and the led will light when you turn the lights off and turn off when you turn them on, and there is no wires coming out of the switch either, and I can do this in leviton decor series switch from north america which is smaller then the light switches in the UK...

I would also use good quality LED's not scavenged Christmas light LED's so you don't have to replace them in few months...   

This is the lamp I am using at the moment. It is connected between the switched hot and the neutral so it lights only in the switch on position (pilot light). Not as bright as an incandescent but much less heat. This is the switch. With incandescent, the metal diffuser was burning hot to the touch, but with LED, it is rather cool and can be touched without burning.

I am reconsidering this setup and have no real idea what I will do. I am in no hurry, once I get an idea, I'll go ahead with something else.

Capacitor in place of resistor is highly sensitive to transients and harmonics. In most control electronics which are powered thorugh capacitor there is some Zener clampng after it, and the circuit is not very sensitive to the input current (it would translate into higher or lower current through the Zener, if the capacitor and Zener are reasonably chosen there wont be problems). If you implement that with the LED - fine, but you won't, will ya ?

We want an indicator LED, it does not have to be very bright. 5mA thorough high brightness LED is quite bright, and at 120V it dissiapates 0.6W. With the additional reverse blocking diode its down to 0.3W. That can be handled by 2 1/4W resistors...