Yes, the Death Hand was indeed atomic weaponry, as stated in House Harkonnen's description at the beginning of the campaign mode (http://www.oocities.org/timessquare/dome/2371/hark.html) .
I guess the author is aiming to remain faithful to the original superweapon mechanics (it is a recreation mod of Dune 2000, after all).
I never liked how Dune 2k Death Hand worked, though. I prefer something more in line with Emperor's Death Hand: big nuke explosion, followed by toxic fallout.
Nevertheless, progress seems steady and interesting. I'm really looking forward to play this.
Manny_F.
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