[...] while the oscillator would require a cap and a resistor.
No, it's plug 'n pray, all contained.
The external clock option would require no external anything(wow awesome grammar there), just hook it up to one of the pins.
I guess you meant "internal" here?
Internal clocks doesn't need to be "hooked up"
External clock are precisely that - the clock could come from a canned x-tal oscillator, a 555, another controller, if you want to synch them or whatever else gives a pulse within the defined range - A pushbutton and a resistor could be used for clock (if you have more time than most
So.... (trying to remember why I started this thread again...).... what's the best choice? Does it really matter? I'm guessing messing with external clock sources could easily brick the MCU, right? Meaning if I set it up wrong I won't be able to fix it?
There's no single "Best Choice" without knowing the specifics of where the controller is gonna serve its purpose.
Some apps demands a very precise timing, while others are very lax on that. Some apps need the lowest possible power consumption.
The "how to clock" question needs to take the application into account, so you just need to know the characteristics of each.
X-tal or x-tal oscillators are needed when timing must be precise (higher frequency means higher current consumption). X-tals are vulnerable to shock and vibration, which you need to address in a mobile application.
Ceramic Resonators are sort of in-between x-tals and RC's in precision. They're slightly cheaper than x-tals, more rugged, but not invulnerable. The 3 pin devices doesn't need the 2 extra caps as the 2 pin variety does.
Internal RC are low precision (around 1%) and while in PIC's, they can be tuned for frequency, I'm not sure how it is with AVRs.
External RC is just like internal, just with extra components/pins used and the possibility to select a wide range of frequencies. They may be a bit looser in precision, depending on how they're made.
External clock is a very open ended use, as you make an oscillator to drive the Clock_in and this can be made precise or not, can be used to drive several controllers working in perfect synch, can use any technology (as long as the clock input sees the correct voltages and rise/fall times). The downside is that it complicates a design and takes up more real estate on the PCB.
Knowing what you want to do with the circuit, the above should help you make decisions on the clock.