Bruce,
Can I use the Arduino Duemilanove to program & test the chip before moving it to my bread board
Yes you can. It doesn't need the environment once the sketch is loaded.
You can make your own breadboard - i.e.
http://art364.pbwiki.com/Standalone+Arduino
Or get something like this "really bare bones board"
http://www.moderndevice.com/RBBB_revB.shtml/
Enjoy!
[edit]Changed link to "really bare bones board"[/edit]