@retrolefty: Thanks for that and especially the heads-up on the diode issue. I think I understand about the diode and will do some research and try to incorporate this. For anyone else stumbling across this later I found what appears to be a post with great detail on what you're talking about here: Regression between uno and uno R2 VALIDATED. HARDWARE PROBLEM CONFIRMED - #27 by system - Suggestions for the Arduino Project - Arduino Forum
@BenF: Thanks for the explanation of how that works. I've never really understood why the cap was there but I think I get it now. I'll try to find more detail on my own but this is a great starting point. As for wanting the reset IC instead of a simple button, I already have a button tied to an input on the Atmega used to wake/sleep it. I want the user to have to hold this same button for 10 seconds before a reset is issued to the MCU. It's a subtle difference but I can't have a dedicated 'reset' button in my design.
If you're curious about exactly what I'm doing I'm essentially doing as shown in the schematic on Page 9, Figure 5 of the STM6503 datasheet for this smart reset IC (here: http://www.st.com/internet/com/TECHNICAL_RESOURCES/TECHNICAL_LITERATURE/DATASHEET/CD00244356.pdf). I just needed to understand how to also retain the classic FTDI reset functionality as well without any conflict. I think I'm almost there thanks to everyone's help!