If this is seriously all that you want to do, you can place all 16 digital temperature sensor chips on one input with either Dallas one-wire or I2C. Your outputs can use two 8-bit ports.

Using an 8051 or any other controller should be no problem since this solution will use no analog signals.

It sounds as if you would like to do this yourselves, so a Basic Stamp that can read I2C is probably simplest. You can address eight LM75 chips at once, and could possibly just monitor two I2C busses. The DS18S20 one-wire route can handle 16 different sensors all at once using one pin. You should also be able to drive an LCD display or RS232 terminal.

The digital sensors are not expensive, but will be a lot simpler to use than a lot of analog multiplexing. With any solution you will need to consider wiring lengths.

David.