SMA ENCOUNTERS WX; TRIES TO PICK UP AN IFR CLRNC. HAS NMAC WITH DEPARTING SMT.

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WHILE PERFORMING A STANDARD ACFT CHK OUT; MY STUDENT AND I CAME ALARMINGLY CLOSE TO ANOTHER ACFT. WE WERE OPERATING ABOUT 13 MI E OF THE PDK ARPT WHEN WE NOTICED THE WX CONDITIONS TO THE W BEGAN TO RAPIDLY DETERIORATE. WE HAD STARTED TO RETURN WHEN WE RAN INTO HVY RAIN THAT REALLY BROUGHT THE VISIBILITY DOWN. I ADVISED MY STUDENT TO MAKE A 180 DEG TURN AND HEAD BACK TO GOOD VFR CONDITIONS. AFTER WE MADE IT BACK INTO THE BETTER CONDITIONS; I CALLED ATL APCH TO GET AN IFR CLRNC BACK TO PDK (OUR HOME BASE). THE CTLR GAVE US A XPONDER CODE AND ADVISED US TO REMAIN IN VFR CONDITIONS UNTIL HE COULD WORK US IN. WHILE CIRCLING; THE CONDITIONS FORCED US FARTHER TO THE E AND CAUSED A NEED TO DSND TO 2000 FT MSL. IN THIS AREA; BELOW ABOUT 2500 FT MSL (AS I FOUND OUT); THE ATL APCH FREQ CAN BE HEARD; BUT THEY CANNOT HEAR YOU. I HAVE SINCE VERIFIED THIS WITH OTHER PLTS. ATL TRIED CALLING US NUMEROUS TIMES. IN ORDER FOR THEM TO HEAR US; WE HAD TO CLB BACK UP TO AT LEAST 3000 FT MSL. WE LEVELED HERE AND TRIED CONTACTING THEM AGAIN. THE VISIBILITY BEGAN TO WORSEN AGAIN; SO ONCE AGAIN; I ASKED MY STUDENT TO MAKE A 180 DEG TURN AND DSND. WHILE PERFORMING THE TURN WE ENCOUNTERED A C-310 WHO WAS DEP LZU ARPT FLYING ON AN INST CLRNC. THE CONDITIONS AT THE TIME OF THE OCCURRENCE WERE MVFR. WE BOTH USED EVASIVE MANEUVERS TO AVOID A CONFLICT. HE RPTED TO ATC; IN VERY UPSET VOICE; THAT HE HAD COME CLOSE TO ANOTHER ACFT. WE HAD PASSED WITHIN 200 FT OF EACH OTHER. ATC THEN GAVE ME A CLRNC AND A VECTOR FOR PDK. MY CONTINUATION OF VFR FLT INTO DETERIORATING CONDITIONS AND FAILURE TO LOOK OUT MY STUDENT'S SIDE WINDOW WHILE TURNING L WERE THE CAUSE OF THIS SIT.