Absolutely you can lose inches and gain or maintain weight. One pound of fat is about 3-5 times the volume of one pound of muscle. If as you say you weren't much of a protein eater before Atkins then again, absolutely yes your muscles could and probably are repairing themselves now that you are eating more protein. If you haven't already (but it sounds like you might have) take some measurements. I wish I had taken mine at the very start but I didn't until I'd already lost about 16 lbs. The tape measure and the fit of your clothes are a MUCH more accurate gauge of how much healthier you are getting then the number on the scale

Debbie

I found the link for the picture that gives you an idea:
Fat vs Muscle