First of all, I'd like to draw attention to the following blue post about bug hotfixes:
The range of the heal on Atonement has been increased to 15 yards. It has been verified to be working correctly for the priest and party/raid members.
It is nice that not only did the fix the Atonement bug, but they actually checked that it was fixed. I don't think I've seen a post like this before, but I'm glad to know that they are actually checking to see if they fix the priest bugs that they say they are fixing. If I recall correctly, and it is obvious that I don't, when Surge of Light first came out they indicated that they fixed it in approximately one thousand consecutive patches without ever changing anything about it1. It was one or two patches of claiming to have fixed early Rapture bugs before they were finally resolved.
The changes to Atonement go beyond that, however. Atonement is now affected by healing bonuses. This means that Atonement will always heal for 6% more than the Smite thanks to "double dipping" on Twin Disciplines. It also means Atonement can benefit from Archangel and Grace. I'm not quite sure whether these all stack and whether they stack additively or multiplicatively yet, but I do know that I have had heals well over 20k on occasion, which seems like a lot for a cheap 2 second cast spell.
This significantly increased throughput and mana efficiency added up to making Atonement viable. I gave it a test run in heroics before raiding with it last night and I was happy with it in both cases, though it seemed more useful in heroics than in raids. The main advantage of this build at the moment is that you don't have to give up much to get it.
This is the spec that I tried out. Comparing this with my previous healing spec you can see I took the five points out of Inner Sanctum and Soul Warding which were both of questionable value to begin with. I also swapped Inspiration out for Surge of Light, because Smite procs Surge of Light, Atonement does not proc Inspiration, and Inspiration doesn't have a very good up time with current crit levels. This choice may be a mistake, but I haven't had time to do a good quantification of either talent so far.
How many Smites I actually use varies a great deal from fight to fight. So far it has been important to keep in mind that the Atonement spec is not an all-out Smite spec. Smite is one heal among many, and the rest of the toolbox needs to be there. In particular, for our Chimaeron attempts I was not using Smite at all because it didn't provide the sort of healing the fight needed. Smite may actually be very useful for that fight, but it will need some more experimentation to figure out how to approach healing overall. For Magmaw, on the other hand, Smite is great for healing the tank.
I picked this spec out as overpowered because of unusually high scaling, and I was waiting for it to come into its own in future tiers. The most recent changes have buffed it enough to make it good at the current tier, and presumably it will need to be dramatically merfed in future tiers.
1. I think the actual number was somewhere in the four to six range. Anyway, for months on end every time they patched anything they would say the talent was now working correctly despite the fact that they hadn't fixed a thing.