According to my copy of Dr. Atkins' New Diet Revolution, the chapter called "And Away You Go -- the Induction Phase" , bacon is listed as an acceptable food, with a footnote "try to avoid meat and fish products cured with nitrates, which are known carcinogens."

I still eat regular bacon with the nitrates, but in moderation. Only two slices a day.

I use the ready-to-eat kind so I avoid the grease mess. Just microwave it in a paper towel for a few seconds and it's ready.