16 bit processing will for sure reduce (or even supress) banding.
But jaggies usually have very litte to do with color depth. Depending on how strong the jaggies are (from subtle to grotesque) they could be related to: using formats with low color sampling (DV or HDV), Motion's anti-aliasing set to a low level, graphics material badly prepared for video, field dominance issues, alpha interpretation issues, too much (or inadequate kind of) compression (HDV is a really bad idea for motion graphics), etc.
FWIW, I am using Motion most of the time in 8 bit projects and don't have problems with jaggies (except Motion projects that import to FCP with the wrong alpha type, but that is solved in 5 seconds). So, while 16 bit processing is awesome, there has to be a less "exquisite" problem there :)