Success... sort of!
So it appears that the download and installation of CrossPack-AVR has included a new version of avrdude and accessories. The basic Arduino application will now use it to compile and upload. By selecting the USBTinyISP from the menu structure and doing a bootloader burn, this now works within the application. The Upload of compile code however, does not.
This is because the Arduino application is requiring a serial port (something down /dev/cu.*) to pass to avrdude when uploading. Yet the USBTinyISP never enumerates on OSX as such a device. What the Arduino app doesn't know, however, is that avrdude (a recent build, that is) does know how to communicate with it without having to pass a hard coded serial port. A quick update to the Arduino app to ignore this setting when the programmer is set to USBTinyISP would fix this issue.
So all that is really missing is manual call to avrdude with the correct parameters. Now on OSX, the Arduino application uses the darwin system temp path for building the sketch. This path is quite long, dynamic, and generally a pain to deal with. So i modified the preferences.txt file to have "build.path=/tmp/arduino
" in it, and created the arduino directory under /tmp.
Now so long as the arduino application is open, the build files will remain down a much easier path to deal with. From here you can open a terminal and go to the directory, and manually issue the program command (for my example it was "avrdude -c usbtiny -p m328p -U flash:w:Fade.cpp.hex" to upload the included example Fade program).
It's a bit of a hack, but it does in fact work. Though I wish the native Arduino GUI interface would work nicer (for the good of all n00b's like myself). That would require either a) the USBTinyISP being recognized as a serial device by OSX or b) the Arduino.app being updated to ignore the serial port when using the USBTinyISP programmer.