Looks like it could be a handy tool for $49. ($53.15 at Digikey, $53.75 at Mouser)
Good for all the typical devices discussed in the forum:
Ooh, here's a neat sounding series of parts: ATmega2564RFR2
Single-chip 8-bit Microcontroller with Low Power 2.4GHz Transceiver for IEEE 802.15.4 and ZigBee Applications with 256KB Flash and 33 I/O pins.
Packages could be a little difficult to install by hand.
I got a 1st gen. Dragon. Don't buy it, it's useless with Arduino, and will sooner or later release its magic smoke.
Search for AVR dagonslayer for more info about the electrical issues.
It doesn't work well with Arduino IDE either, the problem is the bootloader burning. After the fuses are sat, the Dragon gets resetted and need some seconds to boot. Meanwhile the IDE has allready issued the flash command, resulting in an error (cannot find USB device error). I think you'll be better off buying a cheap AVR ICE clone for 5$
ICE, In Circuit Emulator, usually takes over (or replaces) the microprocessor on a board and lets one view all the registers, memory, insert break points in the code, etc.
ISP, In System Programmer, for an AVR chip like Arduino, lets a Programmer change the fuses, write into the flash and EEPROM memory area. No debugging support. Serial.print() & Serial.println() are used via the serial port to the serial monitor for debugging. Also writing to LEDs.
Thanks for the quick reply and the explanation. I read about it on Wikipedia but it's a bit limited to make an informed choice.
Looks like I have to use something like AVR Studio to make it work. Moreover, the first linked page states
The ATtiny13 doesn't have a JTAG interface (don't think any ATtiny does), so you can't use it for JTAG debugging. You'll need a programmer/debugger that support debugWire. Not sure if the cheap clone supports it. A Dragon does though