Atari with MagiC is far better than Mac OS 7.x in any regard (speed, comfort, utilities, multitasking...)!
btw ...did Mac OS 7 had proportional scrollbars?
I had PowerBook 5300 (PowerPC) back in 1998. Mac OS 7 (or was 8?) on it was no faster than MagiC on 16MHz Atari Falcon! It was nice but nothing spectacular, nothing that I did not have on Atari with MagiC (except that Mac was 10 folds more expensive - external SCSI cable cost 100DM!).
Regarding neatness of LC motherboard: how much custom silicon does LC had?
Does it have 16bit, 8 channel harddisc recording? Or integrated AMD SCSI controller is not enough?
How about video? Does LC have some fancy capabilities like 15KHz RGB output, VGA output? Pixel doubling? Chunky mode?
Not to mention DSP...
LC was fine, almost "of the shelf", machine. Nothing fancy so it could be compact.
Atari could easily outdone it with 32bit memory (like LC3; just check speed of CT2 Falcons) and with 32bit expansion slot.
Ataris main problem would be chip and fastram - there should be both RAM, and both RAM should be considerable faster which would drive price higher. LC (Mac) had nice option to increase video RAM (thus resolution) through VRAM simms (I believe they were pretty expensive back in days, but it was very nice solutions for upgrade and for more colors and resolutions)...
--- general notes ---
Windows 2000 make real step forward in regard of computer usefulness in comparison to Atari Magic or Mac with Classic OS (or infamous Windows 9x) - W2K was rock solid OS with fine multittasking and plethora of applications.
Next milestone was Mac OS X with unix foundation and all new and advanced Mac OS X-only utilities and applications (thanks to great underlying technologies in OS X).
Unfortunate I never use Amiga except Amiga 500 for games back in 90s. But I remember some very interesting profound moments at friends house on Amiga 1200 with WB 3.x ...! Amiga had very nice interactive boot screens, something that I still do not see on modern Windows, Macs or Linuxes. Opus (or Dopus?) was very nice file manager and entire OS had very neat tricks to get things fast. I really need to setup my Amiga 1200 and to find some Amiga guru to set OS right.