Well, i know for a fact it can be done but I am not familiar with 8051 myself.

The basics are :

1)you need some way to set the starting address for your device (in other words to what value it will respond to within the network)

This could be by DIP switch to set a binary number corresponding to the address

2)a stage to revieve the DMX data - and for this you will need an interface chip (SN75176)

3) a stage to process this data and send it to whatever you are using to actually control the power to the LED's - here you also need to consider how you are going to vary the intensity of the LED's - a common technique is pulse width modulation.

4)a stage to physically drive the LED's - i.e some form of output transistor

I would suggest for first time making a small unit to control say 3 red green and blue channels (i.e. 1 RGB unit)

going stright for driving 170 from the one unit may be a serious task depending on how you approach it.

regards