The reset capacitor is there to block DC signals. The capacitor acts as a pulse transmitter so to speak, where the auto-reset line will be pulled low briefly by an external source, and the capacitor will act as an AC pull-down, for the effect of a single reset trigger on the microcontroller. If there was a reset button, and it was pressed down by a human (or other object) then it will exert low for as long as you hold it down. If the external trigger device through the capacitor were to hold the reset line low, the capacitor would only show the 'edge' and would return to the normal reset voltage.
Thus, it is important to have that capacitor there. I did the same on my own "arduino pro mini" board I made, so that my FTDI serial programmer could use the DTR signal and reset my ATMEGA328P ready for Arduino bootloading a new program.
I hope my explanation was clear enough. please tell me if it's not, I will clarify for you.