Does an "excited atom" lose energy gradually?
Yes, it certainly can. In fact, it can do either, traverse gradually across excitation states down to its ground state, or jump from its current state to its ground state, or to any lower state for that matter. So essentially, as long as the target state is equal or lower in energy than the current one the electron can jump to it. 

Those jumps have different probabilities though. Determining which process is more likely to occur, and what the probabilities are is a matter of quantum mechanic calculations. Have a look here for example: http://hyperphysics.phy-astr.gsu.edu/hbase/quantum/fermi.html