Thanks for you detailed explaination.
regarding to

1)you can do NOTHING else for that time > yes, I understand. However, I am not planning to do anything while the soft UART working. So I guess this is not my problem

2) you will not have the luxury of ... NOP>
Well, this is what i am asking about in my original question. I was asking if it will help to clock up the 8051 to 22 or even 33Mhz so that I can sub in NOP or deley loop between the bits easier.

My original plan is to use one of the timer to wake me up whenever I need to read the bit, so that time between each read is more or less fixed. Do you see any problem with this idea?