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By anupak
#30106 I wrote a library (and example) http://forgetfullbrain.blogspot.in/2015/09/20x4-lcd-connected-via-mqtt.html) for allowing a 20x4 LCD to ESP-1 using a I2C port expander, Have a look. I had connected the GPIO-0 and GPIO-2 to the PCF8574 port expander. the PCF8574 was powered using 5v and I did not face issues. I think the level shifter is needed (I was in a hurry and hence I took a shortcut).

I was also able to use the remaining pin to interface a button (complete post is in works). However the two posts on Input pin additions and rotary encoder should give you a general idea.

-Anup