Yes, ATF1504AS is a pin-compatible replacement. You can use Microchip/Atmel POF2JED to translate your Altera .pof file to a .jed fuse map that the right Atmel programmer can flash on the device. I have done this before and it works. Clone Altera USB Blasters are really cheap though so I have skipped using any Atmel programming hardware. I do any required development with the Altera tools, translate using POF2JED, and then I generate an an SVF from that .jed file and flash that on the device using some other solution (onboard MCU, Bus Pirate, whatever).
By the way, ATF150X series is much more power-hungry than EPM7000 series, although the device is slightly more powerful. Each LAB/PAL block/macrocell subarray in the ATF150X can take like 40 inputs from the global interconnect compared to 36 in the EPM7000. I think the macrocell of the ATF150X is slightly more powerful too. So if you design using the Atmel software, I guess you can implement more logic in the device, although I have never done this.