Timer/Counter0 not working as expected

Question

All I want to do is set up a timer using Timer0 but it behaves very strangly:

Using the timer I, first of all, just want to turn a LED on and off to make sure that the timer works as expected. Every time the overflow occurs I increase the value of a variable by one and check if it matches my compare value. If so the variable is set to 0 and the LED is toggled on/off.

The edges of the signal are not equally long. The high edges get shorter and shorter as I increase my compare value and the low edges get longer. This is very strange because they should always be equally long.

I already tried many different ways of fixing this problem. I'm already starting to thing that my controller is broken. I use an atmega8.

Here's the code:

#include <avr/io.h>
#include <avr/interrupt.h>

char phase;
uint16_t time;

ISR(TIMER0_OVF_vect)
{
    time++;
    if(time >= 4){
        time = 0;
        PORTD ^= 1;
    }
}

int main(void)
{
    SP = RAMEND;

    DDRB |= (1<<DDB3);
    DDRD = 0xff;

    TCCR0 = 3;//Timer0 prescaler: clk/64
    TIMSK= (1<<TOIE0);  //enable timer0 overflow interrupt

    sei(); //set i-bit

    //just another timer for pwm output.
    TCCR2 = 0b01101011;//fast-pwm; clear OC2 on compare match, set at bottom; prescaler: 32
    OCR2 = 100; //set compare value

    time = 0;

    while(1)
    {

    }
}

Answer 1

Timer 0 is an 8-bit counter. Even with scaling by 64, with the clock running at 16 MHz and the time compare value set to 4, the LED will toggle every 4 milliseconds. I doubt you can see the toggling occurring well enough to determine that it is off more than it is on.

Answer 2

I fixed the issue. My controller was acting strangely but for some reason rewriting the fuses fixed the problem.