My tank game has a LOT of bullets. One of my bullets is the burst shot where you fire one bullet, and it explodes into 8 more after a couple seconds. That right there would nearly exceed the number of hardware lights available. Now imagine there's 4 people firing bullets around which can each spawn three, five, or even eight bullets.
Each player should have 1 light for all of their pojectiles and it could rotate around each one every frame or on a timer. This would also give off a twinking effect which you'd probably want anyway.
Then use the other 4 lights for the powerups.