I wasn't thinking in terms of dedicating an MCU to reading the rotaries, altho it's an interesting idea. It would have to be a 40 pinner, but that wouldn't matter if it's shut down. It would meet the cost objective which I forgot to mention -- I want to keep it cheap and available from Digikey. The PLCC-52 you mentioned costs $116! Actually I'd prefer if I could get it from the local discount place as I need it now for breadboarding and I want to only put in one order to Digikey because of their S & H policy.

The rotary switch I've got has 6 pins of which 4 have signals. They come in red and white, to distinguish the hour from the minutes. I've just remembered I need an extra rotary for the 'delay/increment' time; maybe that'll be in white instead. But it'll put the input count up to 32.

I don't understand about using the 74HC154, it's for outputting addresses isn't it?

I've been looking at shift registers, but they seem pretty complicated. There seems to be quite a variety, so maybe I just missed the right one. It does seem the way to go.

From what I've said, is my problem any more understandable?