can this be right?

You did not misunderstand. The balance between ammonia (NH3) and ammonium ion (NH4+) is pH and temperature controlled, but it is a gradual curve, there are no hard breaks. The higher the pH, the greater the pecentage of total ammonia (NH3 & NH4+) that will be present as NH3 and therefore harmful, but the change is very gradual with pH increases. There are are charts on the web of NH3/NH4+ plotted against temperature and pH, but I don't have them bookmarked.

Very few hobby kits can differentiate between ammonia and ammonium ion, which is unfortunate. The former is toxic and the latter is not. Plus too many hobby kits are still Nessler's reagent based, and it is worthless with chloramined water testing. Most hobby kits still read NH4 (locked into that form by effective anti-chloramine agents such as Prime or Amquel) as ammonia.
 
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What kind of test kits are you using?

Your biological filter, once established, will convert ammonia regardless of whether it came in the water or from biological processes.

It's your comment about adding ammonia in the water causing your cycle to stop and not being able to bring your nitrates down is what confuses me. The nitrates are the end product of the nitrification cycle. They will always be increasing as long as fish are breathing, eating and pooping in the aquarium, and are only reduced via water changes.

Nitrites are the middle product. Ammonia -> Nitrites -> Nitrates.

Anyway, additional ammonia doesn't stop the cycle or the establishment of the cycle. The main concern here the toxicity of a large concentration of ammonia for any time on your fish.

Also, it is my understanding that conditioners like Aquasafe, Amquel+ and Prime are only designed to bind up the ammonia from the chloramine, and are not intended or expected to eliminate the ammonia from the biological process. (Anyone with better information, please correct me.)
 
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