I assume there's other equipment still in use on the line that can only handle 200mm wafers, otherwise it'd make sense to upgrade to 300mm and take the extra ca

I assume there's other equipment still in use on the line that can only handle 200mm wafers, otherwise it'd make sense to upgrade to 300mm and take the extra capacity increase - the masks are stepped across the wafers anyway, there's no reason in principle they can't just add more chips to fill in the extra area if they have the ability to process 300mm wafers.