This answer restricts itself to the question in the body of the text ("Is it likely that a Jew that owns his atheism would be viewed as an apostate by the Israeli Supreme Court, or do they just reject Jews that have converted to Catholicism"), since the title question is distinct and because of its broad framing, would likely be difficult to answer objectively according to the standards of the site. 1
The case that is presented in the question is not the most recent law in Israel regarding the status of converts to Christianity under the Law of Return. As indicated in an article from 2008:
Fifteen years ago, the court rejected a petition by Messianic Jews who
demanded to be recognized as Jews so as to automatically receive
Israeli citizenship according to the Law of Return. In that landmark
case, the court ruled that Messianic Jews had converted, and therefore
were no longer Jewish. Since then, the state has refused to grant all
requests for citizenship according to the Law of Return by Messianic
However, as indicated in that paragraph, the later case clarified matters:
According to Amendment 4A (a) to the Law of Return, passed in 1970,
"The rights of a Jew under this law... are also vested in a child and
a grandchild of a Jew, the spouse of a Jew, the spouse of a child of a
Jew and the spouse of a grandchild of a Jew, except for a person who
has been a Jew and has voluntarily changed his religion." The law
defines a Jew as "a person who was born of a Jewish mother or has
become converted to Judaism and who is not a member of another
religion." According to Myers, 12 Messianic Jews petitioned the High
Court after the Interior Ministry refused to register them as new
immigrants in accordance with the Law of Return. Myers said they had
received letters stating that they would not receive citizenship
because they allegedly engaged in missionary activity. An article
published in the Baptist Press after the High Court ruling was handed
down maintained that the court had ruled that "the Messianics should
receive equal treatment under the Israeli Law of Return, which says
that anyone who is born Jewish can immigrate from anywhere in the
world to Israel and be granted citizenship automatically." But, as was
explained to The Jerusalem Post by a legal assistant to Myers, this is
apparently a misunderstanding of the ruling, which determined that the
petitioners were entitled to automatic new immigrant status and
citizenship precisely because they were not Jews as defined by the Law
of Return, but rather because they were the offspring of Jewish
Although the case is confusing, it appears that this case overrules the previous one on the basis that although converts to Messianic Judaism cannot be said to be Jews under Israeli law, they are certainly children of Jewish fathers. Any Messianic Jew (and by extension, presumably, converts to any kind of Christianity) with a Jewish father (or likely, a Jewish mother_ would qualify under this reasoning. Note that the reasoning used an amendment to the law enacted subsequent to the case mentioned in the question. Now, would this be applied to children of converts to Islam, for instance? That may not be so clear, but I think there is a distinct possibility that it would be, if the evidence of Jewish descent were clear.
This suggests that atheism should not be an obstacle for anyone with at least one definitely Jewish parent. However, let us examine the relevant amendment.
The rights of a Jew under this Law and the rights of an oleh under
the Nationality Law, 5712-1952***, as well as the rights of an oleh
under any other enactment, are also vested in a child and a grandchild
of a Jew, the spouse of a Jew, the spouse of a child of a Jew and the
spouse of a grandchild of a Jew, except for a person who has been a
Jew and has voluntarily changed his religion.
The children of Messianic Jews were determined to have never been Jews, and thus not excluded. One can presume that a child or grandchild of a Jew, raised in an atheist household, would probably fall under the same criterion.
Finally, what about someone who was previously a practicing Jew, but then openly started "practicing" atheism? That is ambiguous, but I think the phrase "changed his religion" is not likely to be interpreted as including not practicing one's religion, but rather only converting to a different religion. Atheism is not really a religion. Note that the current but soon-to-be-former Prime Minister of Israel, Netanyahu, has generally been characterized as having a more ethnic or cultural definition of Judaism, rather than a religious conception, and since he was in power for a significant time, this conception has shaped Israeli policy. I do not think that an atheist Jew would have been rejected under his administration. Anecdotally, I know of several atheist Jews who did not hide their lack of religious beliefs (though they were not exactly anti-theist activists) who did not have any problems in this regard.
1: Some examples of the ambiguity: Is Israel prejudiced against Jews that are atheist if there exists some prejudice against atheists overall, but less than in Jordan, Malaysia, or the United States of America? Is it prejudiced against atheist Jews if there exists a certain degree of prejudice, but even more atheist Jews are prejudiced against Haredi Jews? How many Israelis have to be prejudiced for Israel as a whole to be prejudiced? Differentiating between prejudice (a biased attitude) and discrimination (a biased behavior), a classic sociological distinction, is also important here.