Ok, here is some progress. I tried lefty's sketch, with arraysize set = 4000 to 7000.
I uploaded a dozen or so times, using both the FTDI Friend and the FTDI cable, and
it never failed to burn and verify properly. I still have the RX0 wirewrap wire
running inbetween the xtal pins, and no low-pass filter on the RX0 pin.
arraysize = 4000 gives a 67808 byte file, and 7000 gives 115808 bytes. Upload and
verify takes 70-sec for the 115808 byte file.
One thing of interest - for arraysize > 4000 or so, the sketch no longer works correctly,
ie Led 13 does not flash after uploading. At 4000 and below, Led 13 blinks ok.