I do not know the actual schematic, but usually the clipping indicators in audio amplifiers operate on one of two principles:
1) compare output voltage to DC supply voltage: when the output peak voltage reaches a value near power supply, the indicator flashes.
This is the simpler, and most times meaningless, version: it will not indicate a current limiting or slew limiting condition.
Sometimes it is simplified by referring to a fixed voltage level, and not to supply voltage: it will indicate when the output level reaches a fixed value that is near the maximum .
2) look for actual distortion: this may be done in two ways:
2a) feed input and output to a comparator, via correct resistive dividers. Not easy to do so reliably (in my experience)
2b) look for voltage present at some points of the amplifier (mostly at the output of the input stage, inside the feedback loop).
If the amplifier is not clipping (or into any distortion condition) there will be no actual signal, but a spike will be present when any type of distortion is present. This spike will trigger a comparator that will light the LED. This circuit was first implemented by CROWN (Amcron) in the 70's. They called it IOC (input-output comparator)
Both solutions will work only if the amplifier is distorting the input signal: if the input is already distorted, the amp will try to reproduce it faithfully, including all the distortion.
I do not see any danger for the tweeters from such condition.