I have 2 Percom AT88-S1PD drives. They both came with one 180K single sided drive. One now has 2 3.5" 720K drives
and the other is empty. I took pictures so you can see what they are like. Once I got the 720K drives to fully format, I put
a label on top of the drive because I surely would have forgotten how to do it again:) You can see from the screen shot,
using MyDos 4.53 enables you to have 2867 free sectors after formatting.
So yes, you can get 720K of usable space. I used 2 standard 720K DD drives from IBM pc's. They are a good choice
because they have drive select jumpers. You can probably use a 1.44 drive, but their drive selects are set to 1. The first
drive in a multi-drive setup has to be set to 0. Some 1.44 drives have selects and some can be modified to change drive
numbers. To clarify this, if you use one 1.44 drive, it will show up as drive B not A. You also have to use 720K DD floppies,
not 1.44's. There's a lot of discussion about 720 & 1.44 drive swapping out there.
I don't know anything about playing with FAT12 on an Atari. Hope this helps.
I just noticed that the drive on the left is wrongly marked 1/3. That was from a different project.