My Christmas trains the kids do not handle, but control through the remote the engine. I set up a huge model Christmas train village at our museum Christmas train event and 2 smaller displays each year. Would break the bank to buy lots of MTH lighted cars.
I did find at Walmart a 24 volt small Christmas light string would just need a full wave bridge rectifier to run it from the AC track voltage. But the string is 41 feet long with 500 bulbs with long leads on the back of each bulb. So not really practical but might take it apart and see if I could cut it into smaller lengths.