The problem with the thrice-damned R4 and R7 is that they prevent the USBTiny from dragging the data lines high/low reliably if there is any other load on the ATMega's pins. Jumpering them allows the USBTiny to force the pins high/low even with other crud attached.
The power control is handled by the jumper in the USBTiny and has nothing to do with R4/R7.

