Charlieplexing is quite clever when saving money is the top priority... and performance is the least concern.
However, if performance is even a slight concern then I'd recommend spending a little more money on the circuit so that the CPU has less work to do. In the case of Axoloti, I'd think that you'd want as much CPU available for audio as possible. I'm talking even just a few dollars can save lots of CPU power compared to Charlieplexing.
You can add decoder chips to expand two, three, or four I/O pins into four, eight, or sixteen columns. Then you can put as many rows of LEDs on each column as you like with the remaining I/O pins, using transistor drivers or other boost circuits to bump up the current for more brightness. There are also many LED driver chips that interface via serial links, and these might be cheaper than adding an Arduino - although designing a custom circuit might take way more time.
I think Gavin ended up making the right choice. Make sure you know what you really need and then devote the appropriate amount of resources to that end. Not everyone has a project that would benefit from a VGA monitor, but it's still important to know how many LEDs you actually want on your audio pedal before deciding what kind of circuit.
As for the software, it should not be difficult to add LED support even if it requires custom code.