There is no single "perfect" tool because atlases come in many different formats. The best tool depends on the format you are dealing with.

Imagine you are remastering a PS1 or PS2 era game. The textures are tiny (64x64 pixels), but they are packed into atlases. An AI upscaler (like ESRGAN) works best on individual textures. If you upscale the whole atlas, the AI will hallucinate details across the boundaries (e.g., the wood grain on a box flows unnaturally into the metal of a sword). Extracting first ensures the AI only learns the specific surface.