Another "arduino io panel"

Hello everyone
I was inspired to make an interface to manage a generic operator panel (not for real time operation). I saw that there are already many; mine would be a little simpler and above all easily expandable.
the first idea, which I tried on a breadboard, was to use physical pins (parallel port, mesa, etc etc) controlled by hal with an ad hoc program and with a sort of multiplexer to be able to multiply them almost at will. in theory I could reach 256 inputs and 256 outputs. even too many, but these are its potential.
then I said: let's try to put a jog wheel in the system, and there the problems came; with my system I lost too many steps and had dead times. unusable.
I began to understand if with arduino I would have had more chances of success, and always in theory, since I'm waiting for the components to do the experiments, I should have good results.

prototype features:
128 maximum inputs
128 maximum outputs
3 inputs for rotary encoders
3 inputs for potentiometers
communication with hal via arduino usb
data update time 10/20ms (50/100Hz)
for an operator panel 50/100ms would also be fine but doing the math I should be fine with the shorter times.

what could be useful to insert in this system? the first thing that came to mind would be analog outputs to drive pointer instruments or digital displays that accept 0-5v voltages, to be used to display parameters such as spindle speed, feeds, or anything else that comes to mind.

could it be a good system to develop?

ciao
Roberto