external atmega-usb using rx/tx pins

I am using an stk500 to program an atmega168. In debugging, i've been using the serial port a whole lot. The issue is that I only have one serial port on my computer, so the current process for testing out some code is:

  1. plug in serial cable to the stk500's programming port
  2. program
  3. unplug the serial cable from the programming port and plug into the stk500's serial port
  4. open up terminal application
  5. reset the chip
  6. figure out what i'm doing wrong
  7. close terminal app
  8. go to 1

The part where this becomes relevant to arduino, is that since my computer only has one serial port, I'd like to plug the atmega168's uart rx/tx pins into the arduino's rx/tx pins and then I can use the usb-serial chip for debugging. Is this possible? I tried to do just what I said, and it didn't seem to work. Is the atmega8 thats on the arduino board taking over that chip? is it not as easy as i'm hoping it is? are there other things I need to do in order to make this happen? or is it even possible?

You can just pop the ATmega8 out of the Arduino board and then use the board as a serial-to-usb device. Or even pop the ATmega168 into the Arduino and use the Arduino ICSP pins to program it.

Taking out the atmega8 worked awsomely!
thanks!