Ok to answer all the questions.

My VHDL skills. I have done plenty of work in VHDL, but you know what student projects are like. You rarely get to synthesis/implementation level (most of the time u stop at simulation). I do know VHDL in terms of coding and all, and am quite comfortable with that. But that Oregano one, is too advanced for me. It has configuration files, macros. I have neevr worked with that, and this being a single person project I have to do it. I got the VHDL for programmable logic book, but I need a better one for such advanced concepts.

Why 8051. Originally I was going to work with an AVR microprocessor. I got that one working, but then realised it has very little memory (just 1K). Not enough for what Im doing. I need a free VHDL resource, and the 8051 seemed a better choice, because of all the free cores, it has what I need. more memory space, proven compilers, various simulatin tools.

But. Now I found out about the Picoblaze and Microblaze ( I always thought Microblaze was a development board :|) I'll check those out. Thanks for the help.