Well, it seems I was a little misinformed as to what the Pro Mini can do. Ive drafted a connection plan based on fewer I/O pins than it actually has!
Wonderful! This 33mm x 18mm board has all the pins I need, with the help of the I/O Expander IC, plus about four spare!
The I/O Expander and the RS232 Driver should sandwich to this board and make a nice compact controller module.
Im starting to think though, that it would make sense to treat the 'local' controller as essentially a dumb terminal - just reading inputs and reporting them, or sending outputs as directed. All the processing of the pin data into actual decimal frequency can be done with all the rest of the clever stuff up in the 'remote' unit, where the controller can be phyically bigger but also bigger in terms of SRAM and FLASH etc.
Update - I may have ballsed up with the Texas Instruments PCF8575 though! It might be a 5v device only! The Microchip MCP23017 though is 3v capable and about the same size and operation. But is a bit more expensive!
Edit - Doh! I can obtain the Microchip device as an experimental sample!