Hi,
I don't want to discourage you and understand that you've commited alot of time, effort and expense to see your project through. But the fact is, your example code does impliment bitmath, vectors and other methods that some may argue are overkill for controlling a small number of LEDs. Furthermore, bitmath is usually pretty difficult for most beginners to grasp. Bitmath has sent many students home packing... 
I did a quick look on the NET for a simpler project for you to consider. You could still impliment a button to switch to different modes, one of which is color fading.
http://elenamuse.wordpress.com/2012/11/06/rgb-mood-light-arduino-project/
As for recommending books and such, I believe its up to the person to decide what they want to learn and study. There is a vast section on education in these forums you look at and ask at, start from there. Its also tough for us to offer suggestions as we really don't know what your level of understanding on this subject matter is. If it's as low as you say, then pretty much and any beginners level material is good.