One additional downside is that sprite atlases are annoying when you need to tile the image. Vertically repeating images can't be in the same atlas as horizontally repeating ones. X+Y repeats each need to be in a separate image altogether.

I'm also wondering if, to correctly emit the offsets in CSS attributes in all cases, you'll require some manually inserted placeholders.

Are there specific game engine tools that could be re-used for web work? It's a rather tedious process at the moment, pulling out sprites and arranging them on a sheet. Keeping them updated and so forth.