And instead of using its own cash, it can be changed into a meeting point. You would have two rooms: one for the buyer, and one for the seller.
Interesting idea, but I would like it to be a bit more automated. The problem here is that both must still meet up at the same time in the same place. The rooms could be made in a way however nobody sees the counterparty's face (of course they could then try to stalk the counterparty after leaving the room).
Your point about support is also something to take into account, but if we continue with the "locker" concept, there you could have the same issues, and it doesn't happen very frequently.
But there's another type where you can send the transaction from home and just go to the ATM to withdraw the money once it's been confirmed.
That's indeed a good concept to be combined into the design. It would also align with the idea that all interaction could be done via an (open source?) app not provided by the ATM company, and thus the ATM company isn't involved at all with the exchange itself (it only deposits/checks the cash).
@X-ray: The machine you described would still probably be considered "custodial" (as the company temporarily holds "your" BTC as in my answer to @odolvlobo above) and thus require KYC.