Just want to point out it's not just a 10% nerf - that's just the base nerf on atonement.
On top of that, the 20% glyph on smite is gone from atonement - so that's a 30% nerf (20% + 10 % base nerf to atonement).
Then penance DPS is being nerfed 10%, which combined with the 10% base atonement nerf is 20%.
Only holy fire is unchanged, so it'll be nerfed 10%. But obviously that's the smallest part of atonement.
All in all, I'd guess this is a 22-24% nerf to atonement because of how hard smite and penance are getting hit.
Balanced against that penance single target HPS is up 10%, although it's not clear if this is a buff or a cancellation of the 10% DPS nerf, so that could be nothing. And like you said, the prioritization should be more consistent for all smart heals.
So yeah, it's actually a bigger nerf than the 20% they threw out there at first, and there's even QoL loss losing 10% DPS on our main offensive spell now.
Unless I'm missing something Smite healing should end up getting reduced by 25% in 5.3, not 30%. Just to throw out arbitrary numbers to illustrate my point. If your Smite deals 30k damage right now it will also heal for 30k damage. If you also include the Glyph of Smite it ends up dealing 36k damage and healing (20% more). In 5.3 that same 30k damage Smite will instead heal for 27k. With the Glyph of Smite it will deal 36k damage but still only heal for 27k. So it will end up outputting 75% of the healing it does right now. In other words, it will do 25% less healing compared to now.
The same concept applies to offensive Penance. If each tick hits for 50k now you will end up with 10% weaker ticks in 5.3. So instead of hitting for 50k on each tick you will hit for 45k on each tick. And since your base ticks are now hitting for 45k a piece, and only converting 90% of that damage to healing, they end up doing 40.5k healing in 5.3. Again, this is not a 20% reduction in Penance healing. It's a 19% reduction in Penance healing.
So yes, it's a bigger nerf for Smite healing output, but a smaller nerf for both offensive Penance and Holy Fire healing output. In addition, offensive Penance loses 10% of it's damage output whereas defensive Penance gains 10% to it's healing output.
Even if it were a 30% nerf to Smite healing output it wouldn't be all that relevant. I hope you're not casting Smite for healing output outside of damage modifier encounters. The spell is a filler, and for the most part it's "benefits" come in the form of an Evangelism stack, 0.5 seconds off of the Penance CD, it's smart healing capabilities and to some extent it's damage.
The Penance reduction is going to be a bit more significant. But it's not like Penance doing 19% less healing when used offensively is going to make it a horrible spell. The same could be said for Holy Fire.
I'd say more but it feels like the devs have gone schizophrenic with their changes lately and it seems pointless.