Sorry, it doesn't wash. If the point of this virtual morgue was to save people the anguish and thumb-twiddling of counting down the hours until their sun exploded, then there is no point in Mr. Atoz waiting until the very last moment—especially if holographic Atozes would cover the processing. As you yourself noted, Zor Kahn then becomes a dangling participant.
There is also the matter of the air-tight conspiracy. While granted that conspiracies happen, the bigger they are, the more likely they are to be exposed. And this was a planet-wide effort. There must have been uncounted thousands or even millions of workmen of various kinds to make it happen, to say nothing of all the managers, etc.
Then there's the "Matrix" effect. The virtual world of THE MATRIX was created to pacify the slaves, like hypnotizing very young children by turning on a TV. Assuming that using humans as thermal batteries made any sense at all (it doesn't), the complexity of the system is too great—like the recent "Naked Time" thread where a throwaway character must do something stupid, otherwise there is no story. In the case of THE MATRIX (and assuming such a power system made any sense at all), it would be easier for the machines to lobotomize all the humans, or breed some organic subjects that have no brain, or at least one that will not compromise the system.
I wrote at some length in a recent "City on the Edge of Forever" thread about paradoxes in time travel stories. In the case of "All Our Yesterdays," some consideration was given to paradoxes. Basically, paradoxes can't happen—no time cops are needed to enforce things. "Assignment Earth" is an example of reflexive causality: The Enterprise
was simply a part of history in the same way you are a part of the world you live in now. The atavachron simply made displacement more natural. (It obviously did not wipe memories of the future, and in the convoluted "just because" reasoning of the story the alterations are somehow physical, and the subject will die without being marinated first.)
What doesn't make sense is that Spock would "revert" to his ancestors of five thousand years ago, while McCoy did not. (Seriously? A mere 5,000 years?) Unless that is meant as a commentary on humanity, the eternal savages.
The whole episode reeks of "just because we'd have no story otherwise" reasoning: The Federation has the ability to predict novas right down to the second, yet waits until mere hours before to "warn" a planetary population that they'd better duck and cover. There is similar reasoning in "The Empath"—only so much time and resources before a catastrophe. So the Vyans waste time testing to see which of two populations are "worthy" of being saved. If they'd approached the UFP (and perhaps Balok's First Federation, the Organians, the Metrons and various others), a straightforward evacuation may have been possible. To put this in "All Our Yesterdays" terms, why bother building the virtual morgue at all? Why not just disintegrate everyone and say they were displaced into the past? That's about like kicking someone in the groin to "relieve" their suffering from a toothache.
Last but not least—and this is the biggie—this is just throwaway fiction meant to entertain people for an hour. It is not hard science unraveling the mysteries of the universe. We needn't rationalize an explanation, as it already has one. It's just TV, dealing in catharsis.