How does one design for the power on transient conditions?
Atmel specifically recommend against driving /RESET low from an output pin, because the first thing that the reset process does is set all pins to high impedance, thus cancelling the reset pulse before the recommended reset pulse length has elapsed.

The recommended use of the watchdog timer does not suffer from these limitations. It is designed to reset the board (or there would be no purpose to having it) and it does a proper reset (unlike jumping to address 0x0000).



Reference

Atmel knowledge base - Software Reset


  If you want to perform a software reset of your AVR you should use the internal Watchdog. Simply enable it and let it time out. When the Watchdog triggers it resets the program counter back to 0, clears all the registers and performs all the other tasks. This operation gives the same result as pulling the RESET line low.
  
  You should not try to:
  
  
  Use another pin of the AVR to pull the external RESET line. The pins of the AVR are tristated halfway through the minimum reset time, this releases the RESET line and hence nothing happens.
  Jump to program location 0. Jumping to program location 0 does not clear all the registers and hence you do not have a "clean" reset.
  




Their suggested code to reset the processor:

#include &lt;avr/io.h&gt;
#include &lt;avr/wdt.h&gt;

#define Reset_AVR() wdt_enable(WDTO_30MS); while(1) {}

int main(void)
{
Reset_AVR();
}