servo decoder/encoder

I am making a pcb for decoding 8 servo signal and then its supposed to encode8 servo signals. I also have added a tri color led to the pcb to tell me if the encoded signals is just a mirror of the decoded signals, or if it uses the values send over the serial line( or should i use i2c instead?). is this possible to do with the atmega 328?(does this chip have identical size to 168? Space is important... it looks like i will be able to just extend my receiver with 12mm)

I am bit worried about speed and that the chip might hang and then the whole plane will crash( Maybe i need to route out reset as well so an external component can restart it or? )

Do I also need a 16 mhz crystal? Or is the internal 8 mhz fast enough.

Does it exist 3 ways 90 degree headers both female and male on the market? or is 2 ways the largest?

any comments to these qustions?