You don't mention what package of K20 you intend to use; that plays a large role in figuring out what pins are available and what functions overlap. You need to be looking at the reference manual for the specific subfamily (pin count) of K20 you will be using; that will lay out what pins are available. (Just the pin muxing table by itself is also available in the subfamily datasheet.)
(BTW folks, I'm figuring this stuff out for myself as well. If I've got something wrong here, PLEASE reply and correct me, thanks.)
I'm currently doing a design on a 144-pin K60 with a non-multiplexed 8-bit data, 16-bit address bus. Now, when you read the FlexBus section in the manual, understand that it's the same generic section that's pasted into all Kinetis reference manuals for parts that support FlexBus. So it's going to talk about multiplexed and non-multiplexed, FB_A, FB_D, and FB_AD lines. The pin multiplexing section of your manual describes what pin functions are actually available. And on my 144-pin K60, I only have FB_AD[31:0] and FB_A[24:29] available. So you're maybe thinking "crap, I have to do a multiplexed design". Actually, no.
From what I can tell, there's no configuration option in the FlexBus control registers for non-multiplexed versus multiplexed bus access. The bus timings are going to be exactly the same, regardless of how you have your device physically attached to the Kinetis. All that matters is which pinmux functions you enable and how you attach your device to the Kinetis. When doing an 8-bit or 16-bit bus, FlexBus will assert data on FB_AD[31:24] or FB_AD[31:16] respectively.
So you're doing a 16-bit part. If you only need a 16-bit (64K) address space, then you attach your address bus to FB_AD[15:0], your data bus to FB_AD[31:16], set the BLS (byte lane shift) bit to 0, and there you go.
Looking at the K20 datasheets, it appears that if you want a non-muxed 16-bit interface, you will need at minimum a 121-pin device; the 100-pin device does not have all of the FB_AD signals available. If you need to keep your pin count low, you can do a muxed 16-bit data, 20-bit address bus on the 80/81-pin part; you'll just need a 16-bit address latch.