The difference in cost between an ATmega chip ($2.50) and an ATtiny chip ($1.25) really isn't that much unless you're talking HUGE quantities, and in any case is likely to be dwarfed by the other costs in your device. The ATmegas are available in tiny MLF packages (smaller than a dip-8 by a significant amount), which should address physical size issues.The core arduino environment is not very hard to port to other CPUs, but it might be more useful to point out that by the time you're capable of doing that, you'd probably also be capable of writing apps for the other CPU in "raw gcc" that didn't require any of the arduino environment.
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