Thanks for the comments. X10 is an interesting idea - looks like a 3 pin expansion header (2 digital pins + GND) might be enough to support a Firecracker (right?) although squeezing that in may be a challenge.
Regarding the 1 Hz output from the RTC: The RTC has built-in support for day of the week, day of the month, leap year, etc. calculations so I didn't want to simply read the RTC on startup and then have to duplicate those calculations in software. That means re-reading the RTC at least every midnight. Using the 1 Hz output as my timebase ensures there will be no drift between updates from the RTC regardless of the accuracy of the Arduino clock (or lack thereof if running off the internal oscillator). It may be perfectionist overkill but it only took a single wire...
Auto DST is in the plan but will probably be hardcoded due to overall code size. I've also considered M-F alarm but haven't yet figured out a good way to handle it while keeping the user interface intuitive. The buzzer has a pretty peaky frequency response but wakeup tones will be entertaining to try. I'd also like to implement an Apple style animation of the snooze button LED while "sleeping". I'm going to have to find ways to cut my code size to fit much more into a ATmega168.
I'm experimenting with plexiglass right now for a case. I may post a video when I'm satisfied with the results. Hmm, I wonder how long I can get the clock to run on a rechargeable Li battery if I blank the display like a 1970s LED watch?