If you are referring to Acrobat's 'Extend Features in Adobe Reader' capabilities, I think your interpretation is correct for one of the two conditions. I won't pretend to understand the Acrobat user license agreement but the language 'appears' to be related to extracting data from a form that has been Reader-enabled. This is my take on the two conditions:
1) you can distribute the form to an unlimited number of users but you can extract data from 500 unique responses, only
OR
2) you can distribute the form to 500 unique users and extract data from an unlimited number of responses
See page 408 section 15.12.3 of user license agreement at http://www.adobe.com/products/eulas/pdfs/Gen_WWCombined-20080205_1329.pdf.
I would like to hear from any lawyer on the forum 8^).
Steve