From http://www.imperial-library.info/obscure_text/viveccyrus.shtml:
Yokuda is as you see it because our hira-dirg swords can cut the atomos, the uncuttable, and we did
I don't think that the "atomos" should be read as being the atoms of our world. It's just a word with another meaning, metaphor for something that cannot be cut. Or rather, "cutting the atomos" is the metaphor for doing so. Therefore, as it has nothing to do with http://en.wikipedia.org/wiki/Atom we can also leave out the idea of it causing a "nuclear reaction".
When they "cut the atomos" they did something undoable, perhaps messing with (or messing up) the Earthbones. It has been done before, hasn't it? Just without the same grave consequences.