FWIW, here are the avrdude commands that I used to successfully program my ATMEGA328Ps for this same project:
I used the 8 bit connection.
I used an USBAsp interface dongle to do the programming.
The AVRdude commands that I used to flash the firmware and then set the fusebits were:
For the video chip:
> avrdude -c usbasp -P usb -p m328p -u -U flash:w:SBCVideo.hex
> avrdude -c usbasp -P usb -p m328p -u -U lfuse:w:0xf7:m -U hfuse:w:0xd9:m -U efuse:w:0xff:m
For the interface chip:
> avrdude -c usbasp -P usb -p m328p -u -U flash:w:SBCInterface_328.hex
> avrdude -c usbasp -P usb -p m328p -u -U lfuse:w:0xff:m -U hfuse:w:0xd9:m -U efuse:w:0xff:m
The fuse values are on
http://searle.hostei.com/grant/MonitorKeyboard/index.html,
from where the hex files were downloaded.
Hope that helps somebody.
Cheers - Steve