Lol! That's a brilliant thought.
I think even better than an atheist would be an obscure eastern or tribal religion!
Unfortunately, ever since the civil war I think there's been a law that
the monarch must be a protestant. However, I think that in this liberal age such laws would be very open to change.

It doesn't skip a generation, it goes to another child of the same generation that in the direct line.

Who is in line currently:

Succession to the British Throne has generally been according to the rules of male-preference primogeniture. In other words, an individual's male children are preferred over his or her female children, and an older child is preferred over a younger child of the same gender, with children representing their deceased ancestors.

Succession in the United Kingdom is governed now by the Act of Union 1800, which restates the provisions of the Act of Settlement 1701 and the Bill of Rights (1689).

The rules of primogeniture apply, but those who are not legitimate descendants of Sophia, Electress of Hanover, those who have ever been Roman Catholics, or who have married Roman Catholics are disbarred from succeeding to the Crown.

So it looks like you can't be or ever have been Catholic (or even married a Catholic), but it doesn't say anything about Atheist!