I have done this with both a mega8 and mega168. You'll need to read the stk500 manual on jumpers and crystals.
The only tricky thing is that if you are not using a mega8 that has the arduino bootloader already loaded you'll need to use the programming serial port for downloading the bootloader.
After the bootloader is successfully installed you'll need to switch over to the "spare" serial port for using the arduino environment for programming the chip. Just remember to install the jumpers that connect the spare serial port to the appropriate pins on the mega8--check the arduino schematic.