Yes you are.

However, all modern x86 cores (P2 and up, PPro, K7 and up, etc) are micro-op RISC-ey cores, and the only x86-ness in the entire CPU is in the instruction decoder and scheduler block.

Atom is interesting only in the sense that Intel stripped everything they could off the P6 core and then redesigned stuff purely to use less power. In the end, they produced a horridly slow waste of time, money, and power.

About 6 months later AMD came out with a cut down K8 (while the desktop chips were second generation K10s) that has the same power usage, runs several times faster, supports dual channel DDR3-1333 (vs the Atom's single channel DDR2-533), and comes with a GPU that can decode H264 off Blurays (Atom's paired GPU, a low end GMA, can't decode anything) and can do DX11 (vs DX9) and can do Aero (vs nada).

Intel is coming out with newer Atoms that suck less, but they're nothing compared to what the new Bulldozer-based mobile chips are rumored to be.

Z5xx series Atoms ( http://en.wikipedia.org/wiki/List_of_Intel_Atom_microprocess... ) had PowerVR GPUs (they call it GMA 500, but they have nothing in common with Intel's own GMA's!), the ones that are normally used with ARM CPUs. Sony Made ultra-portable Vaio P-Series with them ( http://en.wikipedia.org/wiki/Sony_VAIO_P_series )

Unfortunately, it looks like it all was a fluke. I haven't heard of any notebooks with Atom Z6xx series, presumably because Windows won't run on them because they don't have a PCI bus. With the architecture consisting of a single model (Vaio P-Series) the possibility of running Linux is vanishing: there was a special build[sic!] of Ubuntu that should run on it, but that's it.

You are mistaken. Atom does translate x86 instructions into micro-operations, but those are not particularly ARM-like.

Yes. Translation layers typically have horrible performance, unless the target is designed with the translation in mind.