Pictures!
Here is the protoboard with the bare Atmel168 and Darlington array chips. I probably should have built a shield instead, but this was faster. I socketed the Atmel168 so I could pull it out and drop it in an Arduino for code updates. Power is coming from a 5V switching wall wart not shown.
Here is the small LED board. There is one inside each pumpkin. I took two through hole DIP breakout boards and cut each up into 4 pieces for a total of 8 small boards just big enough to hold a Phiranha LED from Seeedstudio http://www.seeedstudio.com/depot/parts-phiranha-c-32_18.html and a 47Ohm resistor.
For those of you who count things, your are right there are 7 pumpkins and only 6 PWM outputs. I thought we would only carve 6 pumpkins, but ended up with 7, so 2 of them are being driven by the same output.