Well, I'm assuming that Space Giraffe managed to be different enough to not wake the sleeping bear.
I wonder if it might be because he did that.
Imagine this scenario:
Meff Jinter is hired by Atari to make an officially-licensed Tempest 5000 as an exclusive for the Xbox One.
He then uses that source code, redesigns the backdrops and graphics a bit, and releases it independently as Cyclone 5M, an indie multiplatform title.
That, of course, is explicitly an unauthorised port of Atari's IP, and I assume few people would take issue with Atari blocking that. The TxK situation isn't like that, but - and I think this is the problem - it's rather hard to tell.
So, yes. I wonder if it's being blocked because Atari can claim that since he developed a very similar game for them, he's using their assets internally, whereas a completely new person could develop the game without that stigma.