For assyncronous serial communications...
>... a baud rate of say... 4800 bps you have a period of 208 
> microseconds . Correct ??
Yes.
> will have executed 208 instructions during the high/low period of the
> signal. Instead of just setting there waiting for the signal to change
> states could you not be doing some other work ?? Is this Ok ?
Yes, you can set a interrupt on port change to detect the start bit then you can set a timer interrupt to get the data bits. To be sure that there is no glitch you can read the pin twice per period (timer generates an interrupt at 104 us).

>        What is the standard for receiving serial data ? Do you get some >data then return to the main loop ?? Or couldn't it be made to check >pin state..do other work..check pin state...write data to register after 
>period..do other work.
you can choose...

Regards,
JC