Thanks to everyone for all the help in figuring this out (I'm not there yet, but things seem to be getting clearer).
For clarity, the pins are:
XTAL1 = input
XTAL2 = output
Below are some excerpts from the spec sheet for the 328P:
(I've left out the discussion of Clock Startup Sequences - trying to figure out the post-startup stuff first)
http://www.atmel.com/Images/doc8161.pdf8.3 Low Power Crystal OscillatorPins XTAL1 and XTAL2 are input and output, respectively, of an inverting amplifier which can be
configured for use as an On-chip Oscillator, as shown in Figure 8-2 on page 29. Either a quartz
crystal or a ceramic resonator may be used.
This Crystal Oscillator is a low power oscillator, with reduced voltage swing on the XTAL2 output.
It gives the lowest power consumption, but is not capable of driving other clock inputs, and
may be more susceptible to noise in noisy environments. In these cases, refer to the ”Full Swing
Crystal Oscillator” on page 30.
C1 and C2 should always be equal for both crystals and resonators. The optimal value of the
capacitors depends on the crystal or resonator in use, the amount of stray capacitance, and the
electromagnetic noise of the environment. Some initial guidelines for choosing capacitors for
use with crystals are given in Table 8-3 on page 29. For ceramic resonators, the capacitor values
given by the manufacturer should be used.
The Low Power Oscillator can operate in three different modes, each optimized for a specific frequency
range. The operating mode is selected by the fuses CKSEL3..1 as shown in Table 8-3
on page 29.
8.4 Full Swing Crystal OscillatorPins XTAL1 and XTAL2 are input and output, respectively, of an inverting amplifier which can be
configured for use as an On-chip Oscillator, as shown in Figure 8-2 on page 29. Either a quartz
crystal or a ceramic resonator may be used.
This Crystal Oscillator is a full swing oscillator, with rail-to-rail swing on the XTAL2 output. This is
useful for driving other clock inputs and in noisy environments. The current consumption is
higher than the ”Low Power Crystal Oscillator” on page 28. Note that the Full Swing Crystal
Oscillator will only operate for VCC = 2.7 - 5.5 volts.
C1 and C2 should always be equal for both crystals and resonators. The optimal value of the
capacitors depends on the crystal or resonator in use, the amount of stray capacitance, and the
electromagnetic noise of the environment. Some initial guidelines for choosing capacitors for
use with crystals are given in Table 8-6 on page 31. For ceramic resonators, the capacitor values
given by the manufacturer should be used.
The operating mode is selected by the fuses CKSEL3..1 as shown in Table 8-5