Atmel have an application note for the 89C1051 and 2051 which describes how to use the comparator pins for A to D conversion. It is available for download at www.atmel.com. That will digitize your input signal, and you can do whatever you like after then. I would put some leds in a line, and drive them directly from port pins on the micro. A 1051 should be fine for that - I think 1k is plenty of ROM for this sort of application.