From what I know, the issue with lost interrupts applies only to 8 bit mode of operation. You either poll the chip in a loop, or then switch to using 16 bit mode of operation. Apart from this I would not be aware of any other issues. Actually I'm using this chip in 16 bit mode in one of my designs using a renesas M16C which is quite similar to the C166 you use so doing this seems feasable to me.
To get an idea of how to use the chip I recommend takeing a close look at the slaa137 application note from TI. You find it here:
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If memory serves, the app note uses the chip in 8 bit mode but apart from this said app note should give you a quick start into the topic.
I also found the datasheet and some aditionally available information from crystal quite instructive :-)
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