At the very beginning the code was stripped to almost nothing, but on Atmega328p there was no way to receive long frames. Then I made some researches on the web and I found many people having the same problem at 10400 baud (how OBDuino works is a mistery to me...) so I switched to Software serial and everything worked OK. I never tried to do the same thing on Mega2560 (which is very similar to your 1280).
Now I have three devices running with SoftwareSerial: the ECU emulator, a basic device with Atmega328p and LCD 20x4 and a full diagnostic device (see video below) running on Atmega2560. Yesterday I tried a very basic circuit and SW with Arduino DUE and MC33290 but I do not know how I got two chip (MC33290) burned =( This is very strange because I tested them both on the ECU emulator prior to connect them to DUE and they worked. Once connected to TX/RX on the DUE they got burned :0 ....really strange (and SAD, since they are not very common and now I have only one left). Never happened before during the hundreds of test I did to have the project running....
I really have to learn many things about this DUE board!!! 
Anyway here is the device (with Mega2560) running on my Land Rover Defender:
http://luca72.xoom.it/td5mapsuiteweb/archive/td5opencom/td5oc_running.wmv
This video was taken last Summer and many functions were missing, now it is quite complete and it is able to save a log fuelling data on the SD card while running, reset errors, read settings and so on.
Next step is to upgrade to Arduino DUE and 5" TFT touch display. It seems it will not be as easy as I though.....
Luca