Standalone USB communications

So, it seems my understanding is growing a little.

It would also seem I've been a little confused by my own wording of "I need to retain USB communication" - what I really need to retain, is a method of reprogramming the 1284, and it just so happens that the cable used to do so may connect to a USB port on my laptop. Correct?

Which should also mean, if I understand correctly, that I do not need any onboard FTDI chips or other AVR chips to do a USB to Serial conversion, but rather I just need an ICSP header that goes to the correct pins on the 1284, and I just connect to this using an external converter cable like the one I already posted, this one?

http://www.ebay.co.uk/itm/1x-USB-2-0-TO-RS232-Converter-UART-TTL-Serial-CP2102-For-Arduino-UNO-ATMEGA-PIC-/221067324467?pt=UK_BOI_Electrical_Components_Supplies_ET&hash=item3378a3ac33

...and the above is known as in circuit serial programming, or ICSP? Correct?

So what then is the ISP module? ISP used to burn the bootloader, ICSP used to flash sketches to the 1284?

I hope the above is correct! Many thanks again for all help so far.

EDIT: The mighty pages say only IDE 1 is supported, this may be a stupid question - but does this mean 1.0.1 IDE works, as it is newer than 1?