Yes - in this case the TCV represents the Pelton/Impulse turbine's valve. Since the downstream side of the valve discharges directly to the atmosphere, the Discharge To Atmosphere node (D2A) in this case is just a modeling mechanism to simulate the flow leaving the system. So, I agree that it should be configured so it acts as a free outflow (type set to orifice, "typical flow" set to a high value)
If you wanted to approximate the Pelton's valve as a linear closure (instead of a more complex closure modeled with the TCV), you could use the D2A node alone (without the TCV) with the type set to valve. In this case, the D2A would need to be configured to represent the characteristics of the valve (appropriate flow and corresponding pressure drop)