The downloaded detects the type of microcontroller in use:
Atmel AVR ATmega168 is found.
It would be nice if the arduino environment complained more loudly if it is configured for a DIFFERENT microcontroller than the one the downloader finds.
Yes, or even if it would automatically detect it and recompile your sketch for the correct one. That latter might be a while in coming, though, so it would be good to provide a better error message in the meantime.