You'll more than likely end up overstressing the demux outputs first - a high out will be like driving a diode to Gnd.You should also use a resistor with each diode to ensure even brightness as they turn on or off.
Why are you using a demultiplexer to drive outputs like this in the first place. It is not the wisest of things to do. By doing this it means you have to have the overhead of multiplexing the outputs if you want more than one to appear on at any one time. There are other output latch chips that will make your design so much simpler, like a 74HC259. Or even a shift register 74HC595.
Maybe it would be beneficial to include my entire system schematic to illustrate what I am doing and why.
Why on Earth would this not be wise?
Personally I would use a 74LS42.
Im not sure you understand the function correctly. The LS42 simply sets an output LOW based on the address lines. I need to switch a 38Khz signal to one of four outputs from the 555 timer.