Well i've got both board built and fully working now and i've gotta say i'm very impressed with the whole setup, the only problem i've had is the red diode in one of the leds has failed, i've had them on a hectic red flashing sequence for 2 days and no others have failed.
Heres a few pics. i'll try and get some video when i've got some nice sequences written.

tiRGBLED 10 led controller after assembly

Both Sequencer an tiRGBLED controller in operation on test bench, optical encoder on the top right.

Another shot of tiRGBLED in operation

Sequencer detail shot
Currently with the sequencer i have the following modes.
ON/OFF mode - uses the encoder push button to switch all leds on or off
Sequence mode - uses the encoder to scroll through the different sequences, push encoder button to select.
Hue mode - uses the encoder to adjust hue of all leds
Saturatuon mode - uses encoder to adjust saturation of all leds
Brightness mode - uses encoder to adjust brightness of all leds
I've written about 6 sequences, all of which are pretty simple but i'm getting the hang of it now so i expect to have some interesting stuff soon.
I also found a winamp plugin which i had running for a while before i had built the sequencer but unfortunatly it was released a long time before the sequencer which was only finalised a month or two, The winamp plugin doesnt include the @10 prefix in the data it sends, which tells the sequencer to pass the data through to the controller, hopefully it will get fixed soon.
I'm going to be buying some 1" x 1" acrylic bar which i'll cut in to 2 lenghts about 8-9" long which will be drilled for 3 leds each and 4 other lenghts to go in each corner of mobo tray area drilled for 1 led each. before i fit the leds i'm going to have each piece sand blasted to diffuse the light. The two longer lengths will go each side of the front mesh area on the front of the case, hopefully being able to give a nice flowing rainbow effect.
symphonicpoo: i can agree with you on the cost issue with the rgbled.org stuff i've found it cheaper to buy the componants myself only sourcing the board and the PIC from rgbled.org I've been looking in to buying in a pic programmer and getting a few pcbs made localy to hopefully reduce costs. Since finding this project i've also decided to work on a bigger network of led lighting. Once the computer is finished the next phase is the lighting in my bedroom with a 3 channel controller