No, that only limits how up they HAVE to go - past that they have no obligation. If you get denied boarding and they have not reached the 400% / $1350 offer, you have legal recourse.

They are absolutely not forbidden from offering more if they choose to - this is actually even explicitly mentioned in the regulations. The legalese is not super easy to parse, but this link makes a decent attempt at explaining it: https://www.dailykos.com/stories/2017/4/11/1652290/-The-Wide...

Edit: The Department of Transportation's own official website also explains it quite clearly here: (https://cms.dot.gov/airconsumer/faq)

Q: Is the amount an airline must offer involuntarily bumped passengers arriving on a substitute flight over 2 hours after their original flight still 400% of the one-way fare, for a maximum of $1,350?

A: Yes, an airline must offer 400% of the one-way fare up to $1350 to involuntarily bumped passengers arriving on a substitute flight over two hours after the planned arrival time of their original domestic flight. Airlines are free to offer involuntarily bumped passengers more money than required.

oh, good to know (and makes more sense)

That's only for passengers bumped involuntarily. If the passenger agrees to be bumped - i.e. it's not involuntary - the compensation can be any amount.

The 400% minimum compensation only applies if the airline chooses not to offer enough for anyone to volunteer.