The current design has the IR LED connected directly to the ATMEGA via a resistor which sets the current in the LED to about 40mA(ish). That's the maximum amount the ATMEGA can provide per digital port. This does allow it to work reasonably well but the range is a little low. With the ATMEGA working at 4MHz it should work down to about 1.8V, meaning at that voltage the LED would be running at about 17mA making the range worse. The LED I am using has a continuous running current of 50mA and a pulse at 1A. Either way well above what the ATMEGA can provide. I have modified the circuit to use a transistor to bump the current up in the LED to 85mA when at 3.3V (limiting resistor of 27R) and at 1.8V the LED will still be running at 30mA.
I used a BC548 (what I had available), connecting the base to the ATMEGA via a 2.2K resistor and the LED via a 27R resistor (although I only had a 22R to hand so it is running the LED at 100mA+). I'll be updating the circuit and PCB to use this arrangement in the coming days.
Difference between without transistor (left side) and with:
On another note, I have now made a second remote control for my cassette player which is working well to! Just need to get the stickers printed and attached!