Why can potassium hydroxide not be used to remove atmospheric carbon dioxide?
$\ce{KOH}$ is produced by electrolysis of aqueous $\ce{KCl}$ solutions. Taking into account that the electrical energy still mostly comes from power plants that burn fossile fuels, it doesn't look like the most clever idea to release $\ce{CO2}$, just in order to capture it from the atmosphere again.

While it doesn't make sense to tackle the global $\ce{CO2}$ problem with $\ce{KOH}$ or other hydroxides, they do nevertheless bind $\ce{CO2}$ just as you said. Consequently, these hydroxides were and are still used for the individual protection against $\ce{CO2}$ (self)poisoning in emergency cases and/or in confined spaces. Rebreathers used by fire brigades, divers or miners are typical examples. Initially, $\ce{KOH}$ was indeed used, but nowadays, these $\ce{CO2}$ filters mostly contain mixtures of sodium hydroxide and calcium hydroxide.