In no specific order:
Yes, model railroad application. The servos move the switch points. There are local pushbuttons and LEDs for manual access, the inputs from the other board (not yet designed) feed central dispatcher commands through too operate the turnouts and to lock/unlock the local buttons. The relays are to switch the polarity of the switch frog to match the direction of the switch points - which reminds me I actually need a pair of inputs and outputs for that so the RailA and RailB can be switched to match the physical installation of the servo motor - no guarantee they would be the same for both sets of points.
It's actually working very well on breadboard, no glitches with the Nano. Could be because I am using a nice HP bench power supply too feed it that way and it handles the surges. I was originally going too feed it from individual power supplies, however each of those would source off the same higher voltage bus. I was planning somewhere around a 14V DC bus on the layout and where lower voltage is needed, some of those LM2596 based buck converters. A fuse is probably not a bad idea, but perhaps on the input to the buck.
Pullups for the pushbuttons are also the internal micro ones. My test setup is using the Bouncer2 library for button debounce and thus far I have been unable to generate any incorrect operation even with the cheap tact switches I have and deliberately trying.
Active low for the LEDs is no big deal, as long as there are no issues with signal and +5 sharing a pair in the cable. I was going to put the limiter resistors on the panel board, as I have not yet decided on what buttons to use. Some have limiting resistors on the LEDs and others do not.
The Nano - well, originally I was going to need ALL the I/O lines, including ones you only get in the SMD version of the ATMegas328. Add me and surface mount soldering do not get along. However, since I have resolved the pin count issue, you're right, I could just use the ATMega328. Considering I have a)built a programmer shield already and b) have a box full of 20Mhz resonators and 22 pF caps....
Version 2.0, coming up.
Thanks everybody.