A couple notes to add on here.

1. Ulay - warp on demand. You can resample the underlay to a finer grid by changing its voxel size in the "Define Datamode" menu, Warp Ulay on Deman, Ulay Resam mode and Resam (mm). For ROI underlays, you will probably want NN interpolation. This method, while simple, doesn't do exactly what Paul's recommendation does. The GUI method increases the voxel resolution but doesn't guarantee exact voxel correspondence that the -master options force.
2. Mouse atlas. The mouse atlas you have might just be a coronal one with anisotropic voxels and slices relatively far apart. In the past, I have seen some versions of a Paxinos atlas that have been used in that way. That makes for some interrupted lines like that when showing the atlas as overlay. If you are using single slice volumes, then visualization becomes trickier, but still possible. You might consider using one of the Allen mouse brain templates and corresponding atlases that have higher resolution.
3. @animal_warper. This program may be used for aligning mouse brains to a template like the Allen mouse brain. The feature_size option there will be much smaller usually depending on imaging resolution and type, so you might set that from 0.05-0.3 mm.