Well, along those lines but not exactly so. Here's the setup:
One instrument track runs the VEPro Instrument, which is sending through MIDI ch 1, followed by 15 MIDI tracks sending through MIDI ch 2-16. Now, on the receiving end, VEPro server streaming software is running on the same computer. It receivers that MIDI, all 16 channels of MIDI and transmits it into Kontakt. It is in the VEPro Server that I am opening the Kontakt instance. But from there it is like you said; I keep up to 16 instrument patches in each Kontakt instance. I'm pretty new to using VEPro but it is the best change I've ever done! I can't understand why I have not moved into this earlier, as it allows me to run ten times bigger projects without the dreadful Low CPU Creepshow. When keeping all the Kontakt instances purged nothing is loaded into RAM until I play a note, then VEPro loads the instrument instantly by streaming and sends the resulting audio back into the DAW. If I should use the same number of Kontakt instruments just in Logic/Cubase (or whatever DAW) the computer would need more RAM than can physically fit into the machine
Two good things with Kontakt, for this workflow scenario, is that (1) if you load several copies of the same instrument, but with different playback settings, Kontakt will still only load one set of the samples used and (2) the possibility to do Global Purge on all Kontakt instances so no samples have to be loaded into RAM until you start playing them.