Tim Watts wrote:

http://www.sandevices.com/E681info.html

I suppose once you get past the low hundreds of devices, it makes sense
to split it into multiple blocks with a dedicated controller looking
after them.

I looked at that - and it seems to use something called DMX over
Ethernet aka E1.31 aka ArtNet(?).

DMX and DALI I've heard of, but not E1.31

If *I* were doing this, I think I would stick to my Pi idea

Yes if I had a Pi I'd use it instead of USB-sync, just do your own
bit-banging, you could probably drive 8 strings of RGB LEDs per GPIO port.