For applications which require a real time clock on smaller AVRs (such as M168), there are two techniques for generating a 1Hz interrupt that I know of: external 32.768khz crystal clocking timer2 in asynchronous mode or load TCNT1 with the proper value inside your TOVF1 interrupt. I have used both of these and both work fine for generating a 1Hz interrupt. However, in my way of thinking, the 32khz method is the poorer choice. It forces you to use the internal oscillator for the system clock, which can only be set to a few values, and really limits your possible UART baudrates.
Am I alone in thinking this or is there some benefit to the 32khz crystal method that I'm missing?