This project idea started a long time ago for me. Back then, I tried to make it work with a simple PIC, a homemade parallel programmer and assembler. That didn't go very far. Some years later I hear about the Arduino and the project became much easier to do.
So I ordered a Uno and started learning. My first plan was to use the Uno directly in the MURB. It has enough gpio pins. I needed 17 LEDs, 6 bits for the minutes, 6 for the seconds and 5 for the hours. With a Uno I wouldn't need multiplexing. But then it occured to me what a waste would it be to block my nice little arduino permanently in MURB. It would be better to use just an ATmega328 instead of the whole uno, but I was afraid of how difficult it would be. For instance, I didn't even have an AVR programmer.
It turned out, however, that using an atmega standalone is really simple and well documented. You can use the arduino to program the standalone atmega. The process is well described here.
I got myself a couple of ATmega328, along with some other components, and stated developing directly on the breadboard using the Uno as a programmer.
Here is a late version of the circuit on a breadboard.