I am really pleased with how this little project has turned out. Through it I was able to learn many things and play with a whole bunch of new hardware and software techniques.
This project gave me a quick and simple intro to:
- the ATTiny85 (and using the UNO as an ISP)
- prototyping and checking software on a breadboard
- designing the circuit and basic layout in EagleCAD
- using perfboard and a bit more precise soldering than I have been successful with in the past
- finding the smallest and simplest way to accomplish my goal with my current skills
- repurposing a useless free gadget I couldn't bring myself to throw away
- keeping a log and making videos of the progress I made
The best part is because I was able to fit it in a case designed for very similar hardware it looks like it was made to be that way. Mostly 
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Lessons learned:
- While this could be accomplished with timers and resistors the true power in the Arduino seems to be its ease in producing different behaviors with the same hardware. After I had my prototype all soldered up and functioning as intended I though it would be coold if the LED did more than just stay on. A quick search later and I added a heartbeat function. This required changing a bit about the layout and function of the sketch, but nothing to the hardware. I was able to remove the IC and "flash" all of the changes. It may need future tweaks to reduce its similarity to something that goes boom.
- As a follow up I found the battery life to be very poor. I see I have a lot to learn about using the resources on the circuit. The positive note is that I am confident this will not require any hardware changes. That is the most impressive thing about Arduino to me. I can create a simple hardware circuit and continually make changes and updates via the software.
This is the second part showing the internals: