Its looking good so far. Today I played with the code a bit and got the 38khz PWM IR carrier signal working, added an AND gate to mux the 38khz carrier and data signal and threw in the basics of a TCP WiShield app. I have not added the bulk of the socket code but the device comes online and can be pinged before/after receiving IR commands (this is good!). The IR LED is pretty weak at this point - I have a 100 ohm resistor inline and will likely cut that down - I'm sure the fact that it is running off of the 38khz PWM carrier is helping to reduce its brightness. I just don't want to blow it up so will take the resistor down in small steps...
It seems to receive IR just fine but I don't yet have code to do any sort of IR send (this will be an interesting test) - will likely add the send portion as part of the socket code. Need to define some sort of network protocol to spec out what the device should do (e.g. learn, send, store, reboot, version, etc.). Currently its all C but may take the time to go C++ with it and make a nice set of classes, etc. Might also be interesting to use dataflash and/or eeprom to store IR commands for playback.
I sacrificed the connection light on digital pin 9 so that I could use the 16bit timer1 which is more configurable, etc., and provides a nice 38khz PWM for the carrier.
Edit - replaced the 100ohm resistor to the IR LED with a 22ohm and it produced no visible difference. Got the multimeter out and found that I am losing significant voltage in my two transistor AND gate (even at full duty cycle - all on balls to the walls). Voltage at the emitter of the first transistor is 4.8 (running off of USB and matches voltage at Arduino's +5v out). Voltage at first transistor's collector is cut roughly in half. Voltage at collector of second transistor is a measly 1.8v for full duty cycle and .8v for 50% duty cycle. I guess I'll have to do a little research... More efficient transistors (using 2N2222's)? Different circuit? Dunno - I aint not a EE

Anybody have an idea for components/circuit that does not have such a voltage drop? I need to AND together the 38khz PWM generated carrier and a logic pin that specifies the 1's and 0's...
Fun stuff!
Greg