This sounds like it really needs a live practice, just to see how the tech behaves and how players react to it. I get the feeling there'd be a quick crowd adaptation to dance in a direction that helps to shield the sensor - if it's a toecap, then dance with the spotlight behind you so that if you get lit, the shadow of your leg might save you. Maybe that's fine and just makes the game last a little longer, though.
Nice idea for a simple piece of tech - I'm sure you could get a lot of mileage out of it with other games. Any idea how much it'd cost to build, per sensor?
I guess they could be head-mounted (the foot-mount was because that's where the lights are visible, so otherwise you could be 'killed' by a light that didn't look like it had reached you yet). Or the lights could come from two corners, or very high up.
One LDR, a relay, an LED, a battery.. not counting labour costs, I'd say 'a few quid per sensor' at most, in bulk.
I think we can playtest without sensors - people will be responsible for self-elimination. But a lot of this game is about the ambience, so though we could hack something together with a room, a stepladder, and a spotlight, I think we actually do need a nightclub/theatre even to test.
Maybe as well as the spotlight operator, you could use a modified glitterball or similar disco lighting system that throws out a lot of spots of light in a complex pattern - maybe turn it on later in the game once people are used to the basic idea.
How about one of those light-up dance floors? If this was possible, you could pattern the lights on the floor so you had to memorise the patterns and avoid it, with the pattern getting faster.