Set up the breadboard with two CD4021 shift registers daisy chained:

Next flashed the default Arduino firmware to the ATmega16U2, loaded the sketch in debug mode then fired up the serial monitor:

Register #0: 254-11111110
Register #1: 127-1111111
Note ON 1-7: 51
Register #0: 254-11111110
Register #1: 255-11111111
Note OFF 1-7: 51

Success! The daisy chained shift registers work perfectly, I get the MIDI note ON & OFF messages as expected in the correct order.

I loaded the Hiduino firmware and connected the Arduino to a MIDI monitor, again the notes were being sent as expected:

Next step is to send the shield PCB off to OSHPark to be manufactured!