"I maybe using RTD with 10mv/degree F change. Do I need anything between the RTD and a A/D converter?"
1200*10mV = 12V, no if you use a A/d that can handle 12V input (it must be an aplified thermocouple, never heard of a TC giving 12V)

"Controlling 500W 120V heater. Can I PWM a triac to control the output?"
Yes, but that would be illegal in many places(skewed load), you want to use a zero crossing system with counting n offs and m ons.

"This would be a side function and can not require a lot of processing time."
It should not need much more than a timer interrupt for interval and a timer or external interrupt for counting zero crossings @ +-25 degrees, you do not need to check that often.

"works on its own after the temperature is set? "
Please elaborate I do not quite understand what you mean, of course the regulating of the temp will "work on its own"

Have fun,

Erik