In RHELAH 7.4.2, we have the ability to specify /var as a discrete mount point when installing.

In this configuration, I've found that installing a system container blows up like so:

# atomic --debug install --system registry.access.redhat.com/rhel7/etcd
Namespace(_class=<class 'Atomic.install.Install'>, args=[], assumeyes=False, debug=True, display=False, func='install', ignore=False, image='registry.access.redhat.com/rhel7/etcd', name=None, opt1=None, opt2=None, opt3=None, profile=False, remote=None, setvalues=None, storage=None, system=True, system_package='auto', user=False)
Extracting to /var/lib/containers/atomic/etcd.0
Warning: /exports directory not found.  Default config files will be generated.
Warning: You may want to modify `/sysroot/ostree/deploy/rhel-atomic-host/var/lib/containers/atomic/etcd.0/config.json` before starting the service
[Errno 2] No such file or directory
Traceback (most recent call last):
  File "/bin/atomic", line 185, in <module>
    sys.exit(_func())
  File "/usr/lib/python2.7/site-packages/Atomic/install.py", line 132, in install
    return be.install(self.image, self.name)
  File "/usr/lib/python2.7/site-packages/Atomic/backends/_ostree.py", line 128, in install
    return self.syscontainers.install(image, name)
  File "/usr/lib/python2.7/site-packages/Atomic/syscontainers.py", line 270, in install
    return_value = self._install(image, name)
  File "/usr/lib/python2.7/site-packages/Atomic/syscontainers.py", line 412, in _install
    self._checkout(repo, name, image, 0, False, values=values, remote=self.args.remote, system_package=self.args.system_package)
  File "/usr/lib/python2.7/site-packages/Atomic/syscontainers.py", line 551, in _checkout
    raise e
OSError: [Errno 2] No such file or directory



# rpm-ostree status             
State: idle                                         
Deployments:                                                                                             
● rhel-atomic-host-ostree:rhel-atomic-host/7/x86_64/standard
                   Version: 7.4.2 (2017-10-04 02:35:38)
                    Commit: 408c3cc96af3444733fc00068bcf0c43aa6c640156b089ed3e596cb7d68a5b01
              GPGSignature: Valid signature by 567E347AD0044ADE55BA8A5F199E2F91FD431D51

# rpm -q atomic ostree skopeo   
atomic-1.19.1-3.gitb39a783.el7.x86_64               
ostree-2017.11-1.el7.x86_64                         
skopeo-0.1.23-1.git1bbd87f.el7.x86_64