Scoble poses the question on his blog if ATOM is an example of "Embrace and Extend". I firmly believe that ATOM is an excellent example of embracing an idea and technology (blogging and xml from RSS) and then extending the functionality with what they believe to be better features. This is a fundamental part of our industry, and has been the driving force of our industry for a long time. Technology is all about embracing what currently exists and then extending or improving upon that technology.
When you start to get into trouble is when you add the last E to the phrase, the extinguish part of the phrase. The makers of ATOM do not have the power to extinguish RSS in any way, even though the forces behind it might include IBM, Google, and God himself, no one at this point has the power to extinguish RSS.
An excellent example of embracing and extending is when MS took SQL and extending it with T-SQL, embrace and extend... but not extinguish.(of course they might have if they had the market share) An example of the Embrace, Extend, Extinguish would be what IE has done to HTML and Javascript... where most programmers have to worry about writing the crap that works right in IE instead of what the specs call for.
I think that the technical community often tries to stifle innovation in the name of standardization and compatibility, instead of encouraging people to experiment and innovate, which is what we should be doing. If the ATOM guys think they can come up with something better than RSS, than more power to them. They do not have the power to force it down our throats, so the future of ATOM will be based almost purely upon the quality of the implementation.
All of this crap might sound familiar because it is the basis of capitalism, competition is good, the only thing I can say for certain about the ATOM vs. RSS battle is that both will be made better because of the competition, which is good for everyone.