I plan to purchase a 16 NM for my router, then configure each of the 16 ports with their own VLAN and therefor subnets.
Then connect each of the Ports to another routers FA0/0 port which has multi clients attached to it on another subnet.
This will effectivly give me one router connected to 16 other router in a Hub-spoke formation.
Will this work and can anyone for see any problems?
I can do a Viso diagram if needed
Why don't you convert the Ethernet ports to Layer3 ports not as layer 2 ports with VLANs, i think this would be optimum for your case, having each point-to-point connection in the same subnet (an interface on the hub with each of its spokes):
ip address x.x.x.x y.y.y.y
HTH, please rate if it does,