The controllers are about 10 metres apart Connect all RX pins of the micro-controllers together and all TX pins together with suitable pull-ups.
You must lead a very quiet life. Resistive pullup over such distances is extremely prone to noise pickup.

Use 2 I/O pins on each controller so that its identification can be set ( of course use 3 I/O pins and select up to 8 devices etc.).
That is fine,except you will, as stated by Mr Murphy, end up with too few nodes and occsionally two boards with the switches in the same positions. In
http://www.8052.com/forum/read.phtml?id=103734
there is a discussion about how to do it so that:
a) no switches (that WILL be set wrong) is involved - and
b) the number of nodes is only limited by the capacity of the bus.

As Andy stated this IS NOT RS232, it is "serial communication by other means". If you want me to "read properly" it would be easy if you "wrote properly"

Erik