If I were an employer looking to take on a low hour pilot in their first job, say to fly scenics, and I had the choice of your two applicants ie 200hrs and IREX/ATPL or 500hrs and no extra theory I would very likely go for the one with a few more hours. Those extra 300 hours are going to be a minimum of 350/400 extra take offs and landings, and maybe a bit of downwind or hot/high experience. Those first few of hundred hours are where you start to get a feel for the machine that you fly. My insurance company is most likely to support the decision as the theory means nothing to the excess!
When looking to move on from that first job I entirely agree, 1000hrs and IREX/ATPL may make a candidate preferable to one who had done nothing to further his theory knowledge.
And I am burning that midnight oil!