Atari 7800 history
The Atari 7800 was a wonderful opportunity missed by management. It was compatible with the 2600, has one of the highest quality game libraries available for any system of any time period, and it was pretty cheap. Unfortunately, it was delivered years after it was initially designed, and the video game market suffered the consequences of Nintendo's domination.
Atari 7800 homebrew games
The 7800's familiar architecture and Atari brand name would make it seem a likely choice for hobbyist programmers, right? Sadly, NTSC 7800s use an encryption-based lockout mechanism to make it difficult to produce unlicensed games. Thankfully, that can be worked around via a trick detailed in the backdoor.das file available from several sites.
Atari 7800 hardware
The 7800's greatest strength is its video system. The graphics chip is a technological marvel that used a simple, elegant animation system like nothing seen before or since (the Nintendo NES and Sega SMS both used more traditional methods not entirely unlike the 2600). The fact that it was never used to full advantage is one of the great tragedies of the video game industry.