My understanding is, that even though some people think it may "fry the fish" it really shouldn't. It just means that you have that much more variety in temperature and are able to correct and make temperature changes extrememly quickly.
It can be fine... until it fails. If a 200W fails "on" it will fataly overheat the tank. Having done this once as a teen, I've favored undersized heaters ever since. I usually go a size smaller than the manufacturer states for tank size. If you only need to heat from room temp 68-70 upto 78-80 you are usually fine with smaller heaters. If your room temp is less (ie cost of home heating fuel) then undersized heaters will show their shortcomings.