How do I simplify microcontroller-based prototype into a sensible production-like circuit?
Don't be afraid to use a MCU; just use the smallest MCU in the same family that you can get away with. If you have it working with an Arduino then look at using a ATtiny25/45/85 or a ATtiny2313A/4313. If you have it working with AVR C then look at a ATtiny13 or a ATtiny4/5/9/10. Don't hate on MCUs because they're "big and expensive", because in reality they're not.