It would work just like any traditional ATM that we have working nowadays. The only problem that I can see with this is while depositing fiat to bitcoins is ok, vice-versa - not so much. The core idea of bitcoin is to have it separated from any other form of currency. And with an ATM, you are essentially trading bitcoins for fiat, or vice-versa. This is why I do not think that bitcoin ATMs will become a booming idea, as there will always be another form of currency behind it if used.