1) The genmodel file only affects the generated code for your ecore model, not the ecore model itself. Your transformation uses only the ecore model, as indicated in the error message (DynamicEObjectImpl)
2) ATL does not support Containment Proxies. Adding support would require reworking the containment management code in the ATL VMs, which make sure that every model element has exactly one container (either a resource, or a model element, never both). Containment Proxies break the "same resource" assumption that ATL currently makes according to Steinberg et al.