I've got an Arduino to drive a single RGB LED correctly using PWM.

Now if I want to increase the number of LEDs to 10 - Would I use 3 transistors, and put the limiting resistors on each LED leg as before?

Or is there a better way...?

It depends. Do you want to drive each LED individually, or in 3 groups?

use digital pot's, if you get 2 of em, you can control as much as a 4x4 grid of them, considering you refresh them..

without refreshing, you can control 2 on each digital pot, so a total of 4 from 2 digital pots... there is a tutorial on hooking one of these guys up at the arduino web site under tutorials.