so it seems like I should be able to get it to work...
It will work, it has to. 
Does the baud rate correspond to what the bootloader uses?
How do you reset the target, did you also connect the reset pin's of the duemilanova board to the target? (Actually a picture would be useful.)
Does the bootloader do anything? If you reset the target does it blink a led?
I have a sanguino rbk (a 644p) that still has the original bootloader, it briefly blinks arduino pin 0 after reset.
I have never updated the bootloader but let's say it is time to do so now. I'll burn the latest bootloader from the sanguino project (for arduino 1.0.1) so we can compare behavior.
(Right now I use arduino 1.0.1 with the mighty 1284 stuff that coding badly refers to. But there is no boot loader for the 644p over there.)