why is that shown as "Atmega8 rather than ATmega168
The ATmega8 was probably already in the Eagle libraries and has the same pinout as the ATmega168.
R2 is listed as "100_NM" - is that a 100 ohm resistor?
It's a non-placed part. It can optionally be placed to allow the RTS pin to reset the ATmega168.
will the DTR line feed thru the capacitor?
Yes. When the host computer opens the serial port, it asserts the DTR line, and the capacitor causes that change in level to cause a pulse to appear on the ATmega168's reset line.
And just what does the "RESET-EN" do on that line?
It allows you to cut the DTR trace to disable this "auto-reset" behavior, then if you change your mind in the future you can short the RESET-EN jumper to restore this behavior.
Will the Deumilanove with m168 chip be the same wiring as the schematic shown?
The QuadRAM shield
: add 512 kilobytes of external RAM to your Arduino Mega/Mega2560