I'm currently working on a small Arduino project (future Post) and I want to put all that on a ATtiny85 Microcontroller (smaller, cheaper).
I found a tutorial about how to program the ATtiny85 from the Arduino board and that works really well.
I only had to add a resistor on the Arduino Reset pin as noted on that Blog.
Because I need my Arduino Board and I don't want to have to connect all wires every time I want to program my tiny85, I made a Shield. So now, I only need to put my tiny85 on the Shield and the Shield on the Arduino.
Ok, it's not so beautiful but it works well :-)