1) Now, just taken a look on the RS site to go and collect some 1284s, however - there is a 1284P-PU model, and a 1284-PU model. In your picture it seems you're using a 1284P-PU, is there however a difference that will matter in this application?
2) Also, back on the subject of fuses and .hex files - i've done a little reading, it seems that fuses are just bits of data stored on the chip, used to define certain configurations, internal vs external oscillator, clock scalars etc. Fuses seems to be a time from the black and white days when one time programmable chips were used, and these were indeed little strips inside the chip that must be burned out by applying current to them etc. Correct?
As for .hex files, is this the binary code file that the compiler writes and flashes to the chip?
3) Reverting back to your post that I did not, but I believe now do understand - to set these fuses correctly, I must put the bootloader on the chip? Then when I flash a sketch using the programmer, the bootloader itself is overwritten - but the fuse settings remain the same, as a sketch has no influence upon the fuse settings?
Make sure VCC/AVCC have 100nF also.
Yes, Serial comms will still work fine without the bootloader.