Hi,
Glad you like the project, the original isn't mine but I think its a great project which deserves continued support and development.
I am experimenting with a bit crushing effect in five dollar synth project, it works well with some waveforms, not so much with others. I will try it with the Auduino and add it as an optional sixth control if it sounds good.
In the meantime, I think you might be damaging your Arduino by directly connecting a speaker, try at least putting a 200 Ohm resist in series with the speaker or when you get a chance build an LM386 amp like the one in the last link or an output circuit like this project uses for outputting to an MP3 docking station or similar equipment with an Auxiliary input -
Duane B