Surely, the 128-glyph limit is no real obstacle? Just make more fonts. Or convert to another format after designing in Metafont.
I was involved in a typesetting project in the 90s where I wrote a preprocessor which took 16-bit input (encoded using SJIS—Unicode was not yet widely adopted enough to be practical) and turned that into a stream of TeX code which handled font selection and character coding. It also handled allowing breaks between Kanji/Kana characters at allowable points (e.g., between two Kanji/Kana but not between Kanji/Kana and, say, a period).
There were some specialized extensions of TeX that were designed for CJK typesetting. With the rise of Unicode, this functionality became available in XeTeX.