Thanks! Burning bootloaders is straightforward enough, but I assume that the lack of discussion about modifying them probably means it's well outside of my ability at current.
So the Atmega8 bootloader already has the fuse bits set to use the internal oscillator? It looks like every old 'full' arduino board that I looked at had the 16MHz crystal. Do I simply omit the 16MHz one from the circuit or is something else needed?
The datasheet suggests it will go down to 32kHz operation (would call for a 256kHz oscillator?)