I can confirm that the same issue occurs with USBtinyISP and Arduino as ISP burning bootloader to Arduino AVR Boards 1.6.12's Uno and other ATmega328P boards . After changing the extended_fuses value to 0xFD the issue is resolved. I encountered a different, possibly unrelated, issue attempt...
There are a number of ways to burn a bootloader to an Arduino device, but the one I used (for convenience and speed) was to use an Arduino Uno as an ISP (In-System Programmer). This is well documented and I've used it a few times for different things. First stepis to set up th...