Pulse-width modulation: how to set the duty cycle using two variable sources?
The simplest circuit is to separately feed the sound and light sensor signals into a microcontroller with a A/D, compute the desired LED brightnesses, then output the results as PWM.

There are many micros that have at least two A/D inputs and two PWM outputs.  If this were a volume product, I'd probably start by looking at the PIC 16 line.  If this is a one-off, use whatver you have lying around or are comfortable with.  This would be very easy to do on one of the 16 bit PICs or dsPICs, like a 24F.  You'll have a hard time finding one that can't run from its internal oscillator, has two or more A/D inputs, and at least two basic PWM outputs (called Output Compare on these parts).

The parameters of your algorithm that you mention about would be build-time constants in the main include file.  Changing them would as simple as changing the values in the include file, then ree-building and re-flashing the code into the micro.  If you want to get more sophisticated, you could implement a UART protocol that allows changing the parameters on the fly.