Has anyone used a PC as a 'mini-server' running ATS - telnet services? Can I save the cost of a server (and licensing) by running A-Shell and ATS on a PC running Windows 7 or 10? This would be a 5 user system if it works.

Yes, you can do that. From the perspective of the PC running the ATSD service, the A-Shell sessions would be pretty much just like ordinary A-Shell sessions (which clearly you can open several of on an ordinary PC), except that they would actually use fewer resources because there wouldn't be any screen output.

It's possible, even likely, that a real Windows Server may do a better job of process management, but for 5 users that wouldn't be an issue, especially if the PC in question has a multi-core CPU.

Note that you can test this on a single PC by launching the ATSD service, then launching multiple ATE clients and telnetting to 127.0.0.1.
(In that mode, however, you will likely detect that the ATE sessions run slower then normal; this is because you have a worst-case scenario for time-slicing between each ATE client and it's corresponding A-Shell session running in background.)