My idea is to build a serial cable that has signals Tx, Rx, Reset and GND on end connector. I would connect that cable to my microcontroler project and do ISP programming. I plan to make just a RS232/3.3 converter + reset circuit. As LPC9xx are 5V tolerant I am thinking of using max 232 and make Tx Rx and Reset on 5V levels.
The ISP is the one thing you do not want to fail (you may find parallel programming of the chip is required if certain failures happen during ISP) so do not go by "tolerant" go by "shall be".

Also my project will work on a 5V (I will connect Vdd of LPC904 in series with a LED which will drop 5 volts to about 3 volts).
That is an extremely bad idea. Your 3.3 will fluctuate with the current consumption. Use a LDO such as the LM2937-3.3.

Can I use Flashmagic with my cable? And what about transistor that switches on/off power for LPC (Vdd) ? Can I leave LPC on permanent power (from my uC project) and still enter programming mode?
Instead of all these "inventions" why do you not use NoTouch for 932 which is someones redo of my NoTouch to fit the 93x.

What about 89c669? Can I use same cable? The same for a 5V and a 3.3V device ???. With NoTouch (mine can be used on the 66x) all you need is a serial connection

Are there any special settings in Flashmagic?
settings - yes. "special" settings???

If your board will not have any RS232 make a header with Vcc, Gnd, Rxd and Txd and make a small board with a RS232 transciever for the Vcc you are working with (one for the LPC and one for the Rx2/66x)

Erik

all versions of NoTouch can be found at http://www.esacademy.com