I bread-boarded the prototype and I seem to have everything working. I used an Arduino Mega 2560 programmed as an ISP Programmer to program the ATTiny85.
The PWM can control the brightness of the LEDs the way I want. The timer seems to be delivering the interrupts properly so that delay is as accurate as the internal 8 MHz clock will allow. I've gotten the range sensor to work correctly (tip: put some delay between samples, I suspect the delay should be long enough so all the pulses stop bouncing around the room, triggering false echoes - the bigger the room, the longer the delay).
My only problem is making a circuit board. I managed to get the circuit on a Radio Shack PCB blank and etched it ok, after much trial and error, I must say. The problem came when trying to drill the holes. I bought some drill bits from Adafruit, but they snapped easily while drilling. I don't know what I'm doing wrong there. In the end, I laid out the board in Eagle CAD and am waiting for Dirty PCBs to make and deliver them. The amount of money wasted on toner transfer paper, etchant, PCB blanks, and drill bits is a lot more than the cost they are doing it for me!
I'm also waiting for the LED tracks for under the counter.
Once those are sorted, I'll be installing the lights. When I get them up, I'll post a Youtube video showing them in action.
It's a cute little project and I am enjoying it. I'm also scoring some points with the Honey!