Could this be caused by the unorthodox reset (output pin 14 connected to reset pin)? The uC seems to properly reset though, the sketch is restarted fresh.
That method of performing an external reset has been discussed here before and the bottom line was that the AVR data sheet expressively cautions about not using it because the minimum duration of a reset pulse cannot be obtained once the AVR tri-states all it's data pins during the start of the hardware reset process.
Lefty