If you want to breadboard a TellyMate, there's circuit schematics (
sch_tm_13.pdf) and source code (
code_tm_19.zip) available from the
Batsocks site.
If you just want to build one to talk to an Arduino, its actually rather simple, as TTL level serial signals are used (e.g. there is no need for the optional input conversion circuitry). You'll be able to do it with just a few components.
I've not previously had the firmware compiled for a Mega168 (M8 and M88 only), but I've just had a go, and it seems to be possible with a very simple source-code change: Anywhere that references _AVR_IOM88_H_ should be changed to use _AVR_IOMX8_H_ instead.
I'm afraid that I've not been able to verify that the (modified as above) firmware actually works on a M168 (I only own lowly M8 and M88s), but I can't see why it wouldn't.
I'm actually itching to try putting the TellyMate onto a 328 so that I can play with it's 2kb SRAM, but unfortunately all supplies of the 328 seem to have dried-up, and I don't think Atmel are interested in talking to the little-people about samples.