If I mix the port pins as input/output, how do I output address lines at the same time? ie: If I set the pins one by one, there could be problems, if chip being addressed is already enabled
Using P0/P2 as I/O and using external memory require special circuitry.
You have 2 options:
1) go for memory mapped I/O with a CPLD/a handful of chips/a PSD chip.
2) use e.g. a P89C66x with sufficient internal ram to free up all port pins for I/O.

Erik