How do I control several hundred individual leds with Arduino(s)?
When you multiplex a large number of LEDs individually the common way is to use an N x M matrix. The time is divided in N steps, in each step you activate one of the N row lines, and the column lines that correspond of the LEDs you want to enable. Note that the row lines can each carry M times the LED current, which asks for some buffering. Each LED is on only 1/N of the time, so to keep the normal brightness you must increase the current N-fold. Most LEds don't like this. Charlieplexing is not practical in ths situation because of the large currents involved.

From your question I understand that you want to enable only 1 LED at a time? In that case there is nothing wrong with Charlieplexing. A uC with 31 I/O pins can drive 900 LEDs. Sounds like the consruction will be a nightmare...



Update 5 years later:
Normal multiplexing or Charlieplexing is nice when you have too much time at hand, but when I had to control 100's of LEDs now I would buy a long strip of WS2801 LEDs.