That could work. I also have some CD4021BE Shift Registers that I am thinking of using.
The big picture of this project is an activity board for my son. The keypad is from an old touch-tone phone. I have it playing .wav files of the touch tones which I think is pretty slick. I also have it ringing with the push of a button. There are several switches and lights that I plan on having light up but haven't got to that part yet. I am also planning on using rgb leds that will be color controlled based on what switches are flipped (I have 3 switches with the three different led's built in). Lot's going on here but I am trying to compartmentalize it all.