Can LinuxMCE support multiple sound cards in one computer and pipe different music to each?
Based on my reading yes, this is a viable option. You will still need amplification. It has been a while since I read updates on it but there was once some work on a switching device in a users rack setup to change outputs by dce commands. This would have allowed orbiter control of where the audio was routed to. Perhaps someone else has more information on that project or new hardware that is serial/usb/ethernet controllable.
I have also spent quite a bit of time looking for low cost alternatives for audio-only areas. While I believe I have the correct principles down, my available hardware is about 10-15 years too old to get working. Here are two options you could find with a few days searching here and the wiki:
1. Add USB sound cards to the core. These pipe to the various rooms and you can push audio to powered speakers.
2. Add PCI sound cards to any media director.
3. Use squeezeplayer software on inexpensive hardware. (I believe Roku is fully supported now and may be configurable as a network media player?)
4. Emulate a squeezebox - This is my current project that is not getting proper attention sadly, boot a host device that contains a child VM which runs sqeezebox firmware and is shared to the network under a faux MAC address in the actual squeezebox pnp range. If configured properly I do not see a reason that 5 VMs running similar firmware could not each call a different MAC address and all operate in a single physical machine on a rack...