First of all, once again, thanks everyone for your input on this. This is still an ongoing project so every bit of information counts.
@codlink, great link, thank you! it doesn't quite illustrate the fade that i'd like to achieve, but, like @James C4S suggested, I think this may have to do with adding some transistors. i've already constructed a fading LED as per the following link, but there's a big difference between reading about something, constructing it, and fully comprehending how the machinery created the results, especially for newcomers (like myself):
The same website has the following project as well, but uses a decade timer:
I'd still like to stick with the shift register, combined with the fade. I like the simplicity of these IC's. Arduino was my introduction to electronics, but I really like the fact that some things that can be so tempting to do with Arduino can be achieved much more simply, cheaply, and offer a more direct, hands-on learning experience of the mechanics of electrical engineering. Plus, I find analog fades to be much nicer than digital fades.