How does this high power LED driver work? How much heat will it generate?

With the differential signal the TLC5970 is apparently designed for long strings or on long cables. It's also an HTSSOP with a thermal pad and would be crazy difficult to solder properly; 16 pins each side only .5mm apart.

You could use a MAX488 or similar to drive the differential inputs. You still need two pins though; one for clock and one for data.