You can start with a straight-up Arduino program and mix in as much bare-metal AVR code as you like. There's nothing in between you and the hardware, and that's important when you discover that time matters.

I've done a fair amount of embedded work, some with AVRs and some with various ARM chips, mostly Cortex-M3... I always start with the nice libraries because why waste your time reinventing that stuff if you don't have to? But when you have to reach deeper and gain finer-grained control over your hardware - and almost every project eventually has to do that eventually - it's really, really nice not to have some VM in the way, not to have to start over in a lower-level environment.

Thanks for sharing. I'm working (very slowly at the moment) on an AVR simulator in order to teach myself C. I think this is a great little program to compile and test with.