I would put a low cost MCU in the keypad. It can then easily implement a protocol on the cable back to the host processor, scan the keypad and drive the LEDs. If you find one or the processors with an internal clock you can do the whole keypad with one chip that costs less than $3 US. The hand full of discrete logic chips it would take to built the keypad will cost you way more. In todays environment the use of the discrete logic approach is hardly ever justified anymore.

My suggestion to make the serial interface robust you could simply use a transistor receiver and driver and operate the bus at a clocking speed of around 1200 bps.

Michael Karas