I’ll leave it to other people to get more into the specifics re: your setup etc as I am but a lowly sound bar user (I know I know), but on paper a 7.1 should be fine.
Atmos, as part of its spec is built on a 7.1 ”core”, whether that be Dolby Digital Plus, Dolby True HD, or Dolby MAT (edit: correction to myself, MAT is just the delivery system for data layers for Dolby Digital Plus and TrueHD. The Apple TV in audio settings does report “Dolby MAT” as the output however) The Atmos layer, operating on top of that core is what provides object based rendering, and thus height.
Since all Atmos mixed products (movies, music, games, etc) still have that 7.1 fallback core, if no Atmos decoder/heights are detected, it should fall back to 7.1 on your system.
As to whether or not going for an Apple TV for Atmos music is worth it, I recall seeing one or two albums in the “Listening to in Dolby Atmos Streaming, via Tidal/Apple” thread that people with a 5.1 and no heights did not find as effective as those who had a 5.1.2 system (or higher), but I cannot remember them off the top of my head. However, YMMV