bill, thanks for posting that. i have begun to study it. but i have the sinking feeling that, after soldering it all together, my product will be bigger than a NANO, tho cheaper.
Perhaps, depending on what you use for a proto board.
Here is an example project that uses the same library but an alternate s/w device interface.http://www.3guys1laser.com/blog-cheap-arduino-2-wire-lcd-display-0
It uses LiquidCrystal_SR vs LiquidCrystal_SR2W
Gives you an idea of a real world implementation.
What I'd do instead, is use a strip board but wire up the LCD wires all to one side so it
has all the 16 lcd pins along one edge. That way the board with the LCD can be used as a backpack
and soldered to the LCD.
Then there is only 4 wires going to the AVR/Arduino. (power, gnd, data, clock)
It makes for a nice clean project.
Here is another exmaple that is more of what I was thinking:
While it uses a 3 wire interface instead of a 2 wire interface it shows
what I mean about creating a "backpack":http://www.instructables.com/id/ATTiny4585-LCD-display-control-with-a-shift-regis/
Even if you don't decide to go down the shift register route,
Here is place where you can get really cheap parts.http://www.taydaelectronics.com/
Thins like shift registers, proto/strip boards, caps, resistors, diodes, transistors,
one wire temperature sensors, leds, etc...
If you are thinking going down the alternative custom/small pre-made board route.
Take a look at the teensy boards. http://www.pjrc.com/teensy/
About same price but offers a bit more ram, eeprom, pins, and native USB as well.