As I understand, there's a Catch-22 associated with the ATF background check: from what I've been told, the only way to see if the background check thinks you are prohibited from owning a gun is to submit the paperwork for a background check. And since no gun shop is going to submit the paperwork if you aren't going to buy a gun, or if you say "No I can't possess a gun", the only way to check is to try and buy a gun, submit the paperwork, and see if it comes back negative.
While I agree that a 1-in-1000 prosecution rate for felony gun purchases is probably too low, a lot of those cases are probably people who either didn't know they couldn't buy a gun, and the system correctly prevented them from buying a gun; or people who wanted to find out if they were now eligible to buy a gun, and the system correct prevented them from buying one. So to meet the presumed objective of "keep felons from buying guns", the system appears to be working, and I'd bet a lot of these people aren't repeat offenders (i.e., they don't keep going to try and buy guns once they find out they can't), so it's not worth pursing a case for someone who couldn't have known any better. The ATF is probably actually looking primarily for repeat offenders, either trying multiple stores in succession, or trying multiple stores in different counties or states.
What we probably need is to 1) spend some more time following up on these cases to make sure these people aren't turning around and stealing firearms, and 2) coming up with a better system of checking your ATF gun purchasing status without perjuring yourself.