If my memory serves me right JPEG (yes, the old one, not the new JPG2000 necessarily) does allow more than 8 bits. Is it 12 or 16 bits, I can't seem to remember, but can verify later. IIRC, interestingly, JPEG has a mode for lossless compression also!
Furthermore, JPEG is an algorithm, which in principle can be applied to any number of data bits, the standard just defines what somebody picked (stuff such as bit depth, color space, transforms, etc.) and canonized. Furthermore, many times people mean JFIF, which is a JPEG file container, when they say JPEG, and mix the JFIF file container properties with the JPEG algorithm.
Joofa