You won't get 'proper' VMC at night over the water with a 300' cloudbase but the SAR AOC will permit exactly that configuration because it has to in order to get jobs done.
The whole point of a SAR helicopter with a complex AFCS and its own radar is that it can safely letdown IMC below 1000' - but ONLY over water.
They were using the helicopter for what it was designed for but ended up at 200' too early in the procedure for the obstacle environment. Had the rock not been there, they would have flown in at 200' using the AFCS modes with the Rad alt coupled all the way to Blacksod - not VMC, not IFR but technically, because they had no NVG, still IMC.