In TidBITS-162, there's a second part of a hack started in TidBITS-157 to make ATM 2.0.2, 2.0.3, and 2.0.4 work under System 7.1. The hack in TidBITS-157 involves replacing the Folder Manager identifier 'extn' with 'font', so ATM looks in the Fonts folder instead of the Extensions folder when seeking Type 1 fonts to render. Of course, System 7.0 and System 7.0.1 don't have the 'font' selector for the Fonts folder, so you can't take this hacked version of ATM back to those older systems and expect it to work.
The second part of the hack adds the 'font' selector to these earlier systems by modifying the 'fld#' resource in your system file - this makes the Folder Manager create and subsequently use whatever folder name in the System Folder you add to the 'fld#' resource with the selector 'font'. Now, since you've hacked ATM to use the 'font' selector to FindFolder (instead of 'extn') and since you've added that selector to your 'fld#' resource, ATM will look in the folder you specified for your Type 1 fonts.
(Editing the 'fld#' resource does change how FindFolder works, but the next time you install something it could get rewritten, and Apple doesn't guarantee any of this.)
Unfortunately, the LaserWriter driver won't do the same thing - it will still look in the Extensions folder while ATM is looking in this new folder, so you could wind up with ATM working but printing broken. Only LaserWriter driver 7.1.2 (which comes with System 7.1) or later (like version 7.2, which comes with the LaserWriter Pro) will use the 'font' selector to find fonts, so you either have to use those drivers or hack the LaserWriter driver to make it look in your new folder (can you detect an increasing chain here?).
Also, the hack is of limited use - since you have to have 7.1 (or a LaserWriter Pro, or more hacking nerve) to have a LaserWriter driver that will find your fonts in the same place that your hacked ATM will, you probably won't need one copy of ATM that works under both 7.0 and 7.1 (unless you revert to 7.0 often from 7.1). It just seems easier to take advantage of Adobe's upgrade offer to ATM 3.0 unless you really like this kind of two-bit surgery.