I have adapted 120mm, 5-speed rear wheels for use in 120mm-spaced frames using a 6-speed freewheel, it usually involves only a very slight re-spacing of the axle, perhaps just by moving one washer from the left side of the axle to the drive side of the axle, in order to establish enough clearance for the chain. Typical Atom hubs seem to need very little in the way of taller axle spacers to make things work out, but this is work for a skilled bicycle mechanic.
The rim may then need to be pulled over slightly toward the drive side as part of a routine spoke tensioning, where the tensions are evened up while perhaps a full turn or so is cranked into the spoke nipples on the drive side. The even-ness of tension is crucial to a strong wheel, so a tensiometer should be used or also very convenient to compare tensions of the spokes on the drive side (and later, the non-drive side) of the wheel.
Alternately, one can pluck spokes to compare ring tone, which can produce very precise tensioning, as long as the "crossed" or touching spoke is damped from ringing, so the two don't "ring" as a pair.
This sort of spoke work is best done by someone with wheelbuilding experience, and can be very difficult if the spoke threading is perhaps rusted in place.
The trick is to do a test-fit in order to check for how much added clearance and thus added right-side spacing will be needed on the axle using the new freewheel.
Any protruding bolts, as for mounting a derailer hanger claw, may need trimming, and the nut itself can also be massaged as needed using a Dremel-type tool with a good cutting stone.
Lastly, some old derailers are barely able to pull the chain out far enough, and note that narrower modern chain also buys some much-needed clearance!
Even a 7-speed freewheel can be accommodated, but here I will use a wider overall axle spacing, out to 123mm or so, and just spread the frame manually a tiny amount when installing the rear wheel. I've done quite a few upgrades like this and it can take a bit of back-and-forth with the axle spacing being tested before a final buttoning-down of the axle assembly to proper adjustment and any needed "re-dishing" of the rim with the spokes.
It can further be helpful to bevel the axle locknut and bevel the entry of the rear dropouts, again using the mini die grinder, to make installation of a widened axle more straight forward.
