I recently replaced all of my Atlas switch machines with Z-Stuff DZ-1000s and am running them with Lionel legacy control. I do not use the DZ-1002s and have removed them from the layout. All of the switch machines are directly wired to Lionel ASC units.
All works great except for the derail feature mentioned in the DZ-1000 manual. Based on the manual, it appears as though 2 of the rails on the switch is connected to the left and right terminals of the DZ-1002s. As I stated, I've removed the DZ-1002s.
So I'm not sure how to wire the switches now without the DZ-1002s being in the mix.