The JTAGICE also allows ISP, however it always fails for some reason the enter programming mode. I’m not aware of any “master fuse” which also prevents a full chip erase but apparently there is. After spending some hours scanning the spec of the ATMEGA128 and running several experiments I gave up. Only option left was to remove the controller using hot air and replacing it with a pin compatible ATMEGA64 after which the JTAG perfectly worked and my development board was up and running.