What you describe about updating tos and running it on modern machines has been undertaken and is on a working stage by aranym (www.aranym.org). They even made a bootable linux CD which booted straight to it after X started up. Their goal however is to run mostly gem applications. This project is still alive and going and has had a lot of progress (i.e. use an atari browser to surf the net)
On the commercial front there was MagicPC and MagicMac which ran Magic on an emulated atari. But these are long dead and buried.