DDR2 is double pumped, so for every cycle it gets two calculations.
therefore at 400mhz operating speed it has an effective 800mhz. so yup, this is correct. you may be able to OC it to 533 and get 1066 effective if you are lucky
I am not a proponent of overclocking memory. There is no practical benefit to running memory faster the FSB freq:mem clock ratio of 1:1 as reported in CPU-ID.
For my Core2 systems (Gigabyte), I change the System Memory Mult. from AUTO to 2.0 (DDR2 memory) and let the memclock rise with the FSB frequency.
Leaving the SMM on AUTO can limit your overclock because the memory will reach its limits before the CPU does.