>Are the I/O pins on the 16C84 (or other Pics without built in I2C)
>compatible with I2C directly (with pull ups) or do I need to attach some
>piece of hardware in between the pins and I2C lines?

1K pullups to Vcc should do.

>What are the advantages of using a Pic which has I2C capabilities built
>into it?  Do they contain instructions for I2C protocol?  Is it a
>hardware thing?

Not much.  They can do I2C slave mode, but not master mode.  And
master (and multi-master) are the real headaches.  Note that Mchip
has put out some new PICs that supposedly support master and
multi-master mode (16c726 or something like that) in the hardware.

-tim