pylon:
An ATtiny85 is smaller than the 16U2 and has built-in TWI (I2C). Isn't that an option?
I would although I also need USB functionality. I think I'm going to use a 16U2 and test out the soft I2C workings. If that doesn't work then I'll switch the driver that i'm currently using from its ssop package to its CSP package and use a 32U4 whilst finding a new fabricator that can make a board that has the capability of making boards with trace widths small enough to use a CSP package.