Rethink about it, since dracut is use /sysroot as mount point, really
atomic
should
choose another dir name instead of /sysroot which conflicts with dracut.
Without investigating closely, there's no conflict here, it's just confusing.
In the initramfs, there exists a /sysroot that points to the physical storage.
Thus, there is a:
/sysroot/ostree/deploy/rhel-atomic-host/deploy/$checksum.$serial/sysroot
When booted, there is also a /sysroot which points to the physical storage.
But I don't believe there is a point where there is an actual conflict.