At this time, the only open-source 16-bit x86 C
compiler I know of is
Bruce Evans' C compiler (bcc).
Don't forget James Hendrix's "Small C", which has been around since
what feels like forever. 80x86 and many other ports are available.
http://www.ddjembedded.com/languages/smallc/
The sources are available and widely distributed, though the license
is certainly not a carbon-copy of the GPL (i.e. some will call it
"not open" for one reason or another).
Tim.