I've kind of strayed away from Arduino's, however I have used them quite a bit.
It's probably doable with one of the newer ARM based arduinos, as I'd think you'd be pushing an Uno to manage all the above, and Mega's are not the cheapest of things to use (I built a fairly complex system using a Mega, but the cost of the AVR chip means it'll remain as a proto, and someday I'll probably port it over to something ARM based).
RS485 just needs a serial port along with a suitable driver chip.
If you opt for a serial based LCD display, it'll cost a couple bucks more, but greatly simplify code/chip resources.
4x4 matrix is easy, but you'll need 8 pins to use the Arduino library.
Rotary encoders should be realtively easy, as the ARM chips should handle the interrupts reasonably well (Uno only has 2, and Mega 3or4 Interrupt pins IIRC and some are shared, hence my suggestion for ARM as it's got far better interrupt configuration although I've never checked to see what Arduino has implemented). Off course you could go fro polling the pins instead of interrupts, it all depends on if you're happy to miss the odd pulse.
LEDS are pretty easy. Can either go for direct connected if you have enough pins left, or go for a hex output chip (they have a proper name, but my mind has gone blank!)
Ardiuno libraries are available for all of the above, but you'd need to check that they're compatible with the ARM based boards.