Hi Turbofeet.
You showed prudence in asking advice before you did this. I'll be honest with you. You're creating a convoluted setup, and your family is not going to thank you for it.
You've come to a crossroads: you say you want this to be as easy to use as possible for the wife and kids, but then you say you want to integrate a several thousand dollar toy that only supports 2 channels and put it in between the receiver and speakers of a surround sound system, all because you think you'll hear better sound from a new DAC?
I'm not dismissing your desire, I'm just pointing out the conflict: you can't have both.
If you really want to make things simple for your family, maybe you need to consider having two systems, one for family use, and one you can geek out on.
I'm into high end audio myself, so I get it. But if your family does not, consider the trouble you're inviting.
If you insist on this way, and you insist on the Atom being the DAC and the Yamaha totally bypassed for two channel, then I would recommend using a speaker switchbox instead of putting the Atom in between the Yamaha and the speakers. That might be simpler for your family to operate, and might avoid volume matching issues, because with your described config, both the Yamaha volume and the Atom volume will be active for the front speakers. Adjusting two volume controls to match speaker levels won't be fun for anyone. Or you could switch the Atom's volume mode to fixed before playing movies, but do you want your family to have to mess about in the Atom settings menu?
Plus that box used to have a bug that it could blow your speakers if you didn't mute it when switching inputs. Very uncool. Has that bug been fixed?
I'm not sure if your real goal is to upgrade your sound quality, or if you just want this shiny new box. If you want to upgrade your sound quality, I think you'd be better served by upgrading your preamp and amp. You could have a better DAC that way, better sound, and still maintain ease of use for the family. If you just want the new box, then you'll have to think and chose the best path.
Just out of curiosity, what speakers are you using for the mains and surrounds?
Good luck.