I can do 16 tracks at a time with no problem. 8 tracks use the internal converters and go onto tracks (for example) 1-8, and 8 use an external 8-channel converter box which drives tracks 9-16 through the associated ADAT in. You set the unit for ADAT digital input, and leave the ADAT input for tracks 1-8 unoccupied (leave the blanking plug in it so that it doesn't see any input).
The neat and only-barely-documented thing about the Fostex multitracks is that if you the unit set up for digital in, and it can't find sync on the digital input port for a group of channels, then those channels will silently default to using the internal converters- so you can mix and match. I set the Fostex up as the clock master, and drive its word clock into the external converter box to set up sample sync. Works like a charm.
I have two converter boxes:
the Fostex AC2496, which I got first and keep in my road rack all the time, and the RME ADI-8 which now lives in the studio. For really critical remote recording, I'll pull the ADI-8 and take it with me: it is a *very* good converter setup. In the studio, I'll usually use it in preference to the internal Fostex converters, for both input and output, if I need 8 tracks or less. But if I need 16 at once, I have no problem just using the internal converters for the other 8: they really are pretty damned good, and you have to really split hairs to hear any difference between the RME and the Fostex.
With respect to firmware version: it doesn't matter. Whatever it has, you can upgrade to 1.8 if you have access to a Zip drive. I'm still checking on this new 2.2 stuff, and if I can get it to work, I'll certainly post it here: but I'd counsel caution until we know for sure...
I don't have the AES option on mine, so I have't played with it. however, I assume that you can mix and match analog and digital by using the same hack method I described above. The only thing that shows up on the digital outputs is one of the digital audio protocol formats- S/PDIF, ADAT, or AES/EBU. If you want WAVs out, you can write them to a slave device on the SCSI port (ZIP, JAZ, or a limited set of other drives). You can then disconnect that unit and carry it over to your computer, plugging it into the SCSI port there: I call this "sneakernet".
I very much prefer to use an ADAT-capable soundcard (Ihave the RME Hammerfall), and that allows me to fly 16 tracks at once into Cubase with perfect sync and no drama at all. Seems to me that dragging things around via SCSI is a much bigger pain in the butt, but there are people here who will disagree with me on that (some of them pretty vigorously!).
I have no experience using AES/EBU, and my studio has been completely optimized around ADAT optical: so you're on your own with that set of questions. But in an ADAT-based world, I can tell you that it hums along very nicely indeed!