I took a quick look at the source code and I do see what looks to be support for ATOM. However the two feeds I've tried both display errors.
http://www.atomenabled.org/atom.xml
http://www.povertylaw.org/clearinghouse-review/atom.xml (this is the one I really want)
Here is the error that's displayed below the other feeds in the web part:
http://www.atomenabled.org/atom.xml had a problem reading the feeds from the URL.
Error returned from FeedReader: Object reference not set to an instance of an object.:SmilingGoat.SharePoint.WebParts.Rss
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