I encountered this mod, http://www.eevblog.com/2011/03/25/eevblog-158-avr-isp-mk2-lm317-regulator-tutorial/
, that allows the AVR ISP MKII to actually power the circuit being programmed. This is one feature I like about the PicKit2/3, that I missed on the AVR ISP MKII. While he used an LM317, he analyzed its performance, and it seems clear that a low drop-out regulator would work much better. So for my attempt I used a TLV2217-33 instead of the LM317.
Since I don't like dead bug assembly (like used in the link) I went ahead and created a very simple circuit board using toner transfer method. The mod requires a LDO regulator, two caps (I used 0.1uF), and two switches (1 SPST, and 1 SPDT). The SPDT switch lets you chose between 3.3V or 5V for the circuit being programmed. The SPST lets you connect/disconnect USB power from that circuit, so when in the off position the programmer works as it would normally.
Easy mod, that so far has been working very well. I am attaching a few pics that might explain it better--though I do recommend watching the video in the above link.