Since I've worked on some similar projects few months ago I couldn't resist not dropping my 'two cents' over here.
First, just to shed some light on the scale of this project with your expectations, suffice it to say, it's Huge!
For mass production, only viable solution would be custom designed chip-embedded LEDs (they're getting really cheap in high quantities these days) or microcontroller matrix networks with some intricate program written laboriously (keep in mind there is no clear-cut on/off state for these LEDs and there are singular transitional fades - it's no trivial task even for a seasoned programmer) which will not be an option if you want to have a working prototype for 'this' Christmas.
The 'key' in this kind of art, dealing with visual recreation like magic performance or movies' special effects is the 'illusion' we create not the exact materialization of the reality. So here I'll try to give you some thoughts you might find useful and time saving hopefully:
Lay a layer of always-on LEDs for background lighting. Maybe about 100 LEDs (for 200 in total) would be about right. These mildly-lit LEDs will be scattered randomly all over the panel. If this light show is like an outdoor display, it would be a very safe bet that no one will complain why half of the starts won't 'do' anything!
The other thing was the idea that you wanted LEDs to go from dim-bright to full bright. Can be done (R_DIM in the schematic) but I'm not sure about the impression. LED nonlinearities (should best be done with PWM controllers) and other visual miss-cues might come up. I can be wrong as well so I suggest you try 'complete-off state to full bright' version to compare the effects.
Ok, just to give you some ideas I've posted some schematics, yes old-school and analog and not as efficient as a PWM type, just to show you how I went about it. It's a simple blinking circuit with slow fades. One second slow-on and three seconds slow-off. You can't get anything simpler. For my own project I was looking for a 'Glitter' effect with a little faster transition. Since LEDs were in front of audience, a truly smooth transition of analog circuit appealed to me than a jagged stepped fade-curve of a hurriedly written code of a generic PIC PWM controller.
Circuit shows one of the twinkling 'LEDs-groups'. No we're not going to make hundreds of these! CD40106 CMOS ICs contain six Schmitt-trigger inverters. So using two ICs would give us 12 groups or you can go over the top and use three ICs to get 18 cavalries of flickering LEDs. For this example each group will sum up to 8 LEDs (for 12-group arrangement and to make up for the remaining 100 places) that will be spread across the panel in an arbitrary manner.
For a timely disclaimer, I haven't tested the exact circuit I've posted here. My work was on a low power single-transistor version. So if you really wanted to embark on this, get a bunch of white LEDs (use a minimum of 6 LEDs) and make a prototype on a breadboard to check and see the functionality.
For about 10 LEDs, power dissipation isn't that much; I just used BD139 just to be on the safe side. And it might get a little warm. A regulated supply of 12v would make me and lot of LEDs feel safer. But regulation's not necessary (check if the supply remains between 11v - 13v under load, shouldn't be much lower or higher). Current limiting resistors (270-Ohm) were selected according to my white LED's 2.5v forward voltage. It'll push LEDs dangerously to their 20mA limit (I wanted a true bright sparkle), if you feel it's too much use 68K-ohm in place of 56k-ohm resistor. And use a variety of values for R_TIME to push groups' timings out of sync.
All right, All in all, I just wanted to give you some ideas while I know they're heavily compromised compare to your original plan. I really hope you get it done in time for Xmas. And hopefully not spending your entire holidays getting it done! Times precious, good luck!