atoi:
At the moment I don't see any downside to multiplexing at all, just seems like the commonsense route. Anyway, I'm thinking the ShiftOut example can provide most of the basic information I need at this point.
The downsides to multiplexing LEDs are:
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The processor has to regularly do work and change the values on its output pins and in the shift registers to keep the display refreshed. This isn't difficult, but is more software to write.
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The maximum brightness you can achieve is lower, especially if you are being cautious and running the LEDs at no more than their maximum continuous rating (which is a good idea during development in case the multiplexing software stops working).
The upside is lower component count. For example, to drive all 200 LEDs independently, you current need enough shift registers to provide 600 outputs, and 600 resistors. If you multiplexed them as 5 rows of 40 LEDs each, you would need enough shift registers to provide 120 outputs, and 120 series resistors, along with 5 row drivers.