Using Diecimila as AVR ISP for a ATmega8

prmd:
Did I understand you correctly, that disabling the auto-reset (meaning pulling-up RESET to 5V thru a 120R) may get Arduino0022 work fine
to re-program the flash of the ATmega8 using the Diecimila (ATmega168) as AVR ISP?

Yes, you understood correctly.