The path looks good, and running Atom like that is fine. However you should not be running pyblish-standalone, but instead you should be running pyblish-qml/app.py directly.
That will launch a debug-session of Pyblish QML where you will have a bunch of plug-ins to play around with. You can also run it directly from Atom, one you have your path set-up the way you have.
Thanks for pointing this out, it really should have been in the guide, so I added a chapter about it.
Have a look there for more thorough information.
Edit: Oh, and about the recursion you experienced, that sounds like an unrelated (and dangerous) bug. Is standalone working elsewhere, such as in your Ftrack scripts?
Edit: You'll notice that when you close the GUI in debug-mode, the Python process might still be running. It's safe to either kill this via CTRL-X or similar means through Atom. Or you can pull the commit I just made to make this more friendly.
One of the benefits of running repos individually like this as opposed to using pyblish-win, is that you can more safely update them.