So my question is, after I write my program to the Arduino board+uC, can I then just remove the uC and place it in my properly-wired embedded application, effectively just using the Duemilanove board and Arduino IDE as a uC programmer, and convenient prototyper?
This is a good idea that alot of people use. I have recently developed my A-Level electronics project with Aruduino. I used the board to prototype the major parts of the circuit e.g. LCD Screen, Joystick and button interface.
I then created a PCB with all the neccessary components and programmed the ATMega chip in the Duemilanove. This was a very simple plan.