ISP is still there. It just won't change fuel consumption rate anymore, but caused reduced engine thrust in atmospheres (with constant fuel consumption). Which means you need stronger lower stage engines (or moar boosters) to compensate for the lost thrust. That's not enough to make the rather powerful KR-2L an upper stage engine, It rather seems like Squad did heavily nerf the atmospheric efficiency of some engines. Makes sense with the thinner atmosphere. You mean that kerbals fell of the top of a ladder? That one is fixed and part of the climbing system.