program Atmel chips using Arduino Uno- guidance requested

xl97:
nope.. you can use your REAL Arduino for everything you need.. You can turn it into an ISP programmer to get bootloader software on other chips.. or... use it as a 'pass through' device to send sketchs form the IDE through the board onto the target chip/board..etc

Thanks your explanation is very helpful. So I have to select "Arduino as ISP" from the menu?
Right now it shows AVRisp mkII. And then upload the sketch by selecting "Upload using programmer"?

I will order some chips soon. Is it possible for instance to use the ATMEGA8, or does it have to be ATMEGA328? My board shows up as Arduino pro, 5v, 16 Mhz, ATMEGA328.