After some investigation into why this game is so unresponsive to mouse movement in DOSBox, I could not find a clear problem, but learned of a way to improve response. A control system is used that periodically repositions the mouse coordinates to 320,240 (center of the 640x480 video resolution), and mouse movement away from the center point is used to control turning. How often the coordinates are read versus how often they are recentered has a considerable effect on response. The read/recenter ratio could be off due to a number of things, including timing issues in DOSBox and low system performance; but in any case, the control system can be externally influenced.
I made a program that reduces recentering by allowing a specified fraction of the mouse driver calls to pass, dropping the rest. The program, which should be placed in the ATLGAME folder, takes a parameter of a rate divisor and launches ATLDOS.EXE with reduced recentering. A parameter of 2 will cut the recentering calls to half, 3 to a third, and so forth. Cutting the recenter rate too much can give the mouse control a loose feel because this workaround trades off how quickly movement is arrested for increased response. Experiment with combinations of cycles, mouse sensitivity, and rate cuts to find what works best for you. Source code is included in the attached archive.