daywalkerdha:
What does your modified sketch do to make it simpler and would it allow me to program the external micro and still get serial data without changing the connections every time?
The sketch provides a "serial relay" which has two on-wire options... the standard TTL-serial and something I call Knock-Bang. The Knock-Bang protocol is designed specifically for debugging a tiny processor when using an Arduino as a programmer. It's more robust and faster than TTL-serial.
In either case, you don't need to fiddle with the wiring. MISO (one of the programming lines) is used for serial communications.