Crazy idea involving hundreds of LEDs

[JBotAlan]

For the past couple of days, I thought it would be *really cool* to make either my own marquee hat, or eventually a vest of LEDs. It could display words or pictures (using PWM to dim the lights and get something besides ON and OFF) and it would be really hard to not notice a flashing LED vest.

Now, since I'm just a programmer, I'm used to having all the outputs on my processor. As far as I know, there's not a processor in the world with a few thousand outputs...that would be impractical and stupid. But how do I multiplex? What chips are available?

I started Googling around, and remembered seeing Christmas light controllers on computerchristmas.com and immediately went there. On that site, there's 2 different methods of controlling lights; one involving flip-flops and decoders (Link) and one with 595 shift registers (Link).

Both of these seem horridly inefficient, especially if the final goal is to have thousands of channels (can you picture me with a huge box of flip-flops on my back? ). Is there a better method? I'm probably going to learn some of this at college, but I'm not there yet (I wish...).

How do real commercial marquees do it? They have cool multi-color effects and fading in and out...I'm sure it's all pulse-width because I can see them flicker.

So....any suggestions would be greatly appreciated.
JBot