I think a reasonably playable version can be created for the Atari, and have designed some graphics for it. I suggest using 'Super IRG' mode for cell-based animated objects on the screen.
Super IRG is a software-driven 'flickery' version of a normal IRG mode: 40x24 characters, 4 colors per character, with a 5th color available in placed of the 4th color, when characters have the high bit set. It's also known as "GRAPHICS 12" mode in Atari BASIC on XL and XE systems.
Super IRG mode uses a Vertical Blank Interrupt (VBI) to flicker between two character sets (fonts). The persistance of vision in humans causes the colors to blend, allowing up to 14 colors on the screen at once (not counting the player/missile graphics (sprite) colors).
Below is a simple GIF animation showing a Galaga bug swooping down for an attack. The enemy is 2 characters across by 2 characters tall; or 8x16 pixels in size. For the sake of speed, the enemy moves one character at a time (4 pixels left or right, and 8 pixels up or down). This is very jerky compared to the original Galaga arcade game, but should be sufficient. (It's also, I believe, what the Nintendo NES version of Galaga does.)
Now... who's interested in programming this thing?
Other related software-driven (flickering) modes that provide more colors on the Atari 8-bit include APAC (Any Point, Any Color; 80x192x256), ColorView (80x192x4096, 160x192x64 or 320x192x8), HIP (Hard Interlaced Picture; 160x192x30 greyscale) and RIP (160x129x40).