I guess simplicity is the main reason I decided to use the blinkms. When I first went into this project and started reading about controlling color changing LEDs it all seemed a bit overwhelming. But when I found the blinkMs, I could finally wrap my head around what I needed to do and how I was going to program it (yes it does use the wired library btw). Maybe if I can get this working then on my next project I will try to move into some more complex, but cheaper ways like you described, bilbo. :) But for now, my electronics knowledge basically consists of what I remember from my electronics science kit I used to play with when I was ten and what I have taught myself for this project. Working with individual ICs seems a bit over my head. Thank you for the advice though. I bookmarked those pages so that maybe in the future once I am a bit more advanced I can go that route and save some money.
I am happy to hear that it sounds like the only thing I really got wrong was that transistor. I had a feeling that this part was not going to work. I got the idea from another project I saw where someone used this transistor to make just a simple circuit that had LEDs pulsing to music with just a TIP31 12v power and a group of LEDs. No arduino or anything. And with my vague understanding of what a transistor does, I was hoping the arduino could just read this as input, but I was also pretty sure that nothing is ever that easy. So am I on the right path with using a just a transistor, just using the wrong one, or do I have to do something a little more complex to get this to work? I'm not really familiar with envelope follower circuits or inverting amplifiers. I guess I will go read about those tonight when I get off work.
Thanks so much for taking the time to look at my schematic and help me with this, CrossRoads. It has been a lot of fun trying to figure all this out and teach myself about electricity, but at a certain point you need the help of an expert.