You have the correct understanding. You cannot carry more than 200 loot at a time.
However, I want to believe this is just a temporary change in order to encourage players to sell their loot so that Dusty can gather more information about balancing the loot system and economy. If players refuse to sell loot or just hoard it, it would take longer for him to figure out the effects of the price changes. This is just speculation though, no official explanation for this change has been given yet.