Emulating the exact behavior with LEDs may be hard. I believe the original used pretty strong incandescent bulbs, possibly a ready stage lighting bar. Those would have very fast on time, yet not as instant as LEDs, and a noticeable cool-off time.
However, approximation with two LEDs enabled at the same time is not that hard. Fortunately it is realizable with OR gates only:
L0 = O0 ∨ O8 ∨ O9
L1 = O0 ∨ O1 ∨ O7 ∨ L8
L2 = O1 ∨ O2 ∨ O6 ∨ O7
L3 = O2 ∨ O3 ∨ O5 ∨ O6
L4 = O3 ∨ O4 ∨ O5
Where Ln stands for n-th LED, On stands for n-th output.
That is on logical level. I did not build a physical copy, but 4000 series chips may be pretty limited regarding output current. Without additional buffering, this will lead to uneven brightness across different stages.
Falstad simulation, image in the attachment.
As for the number of lights, in the opening KITT is visible with both 6- and 7-position bars.