I am referring to equivalent
If you're going to use full frame equivalent specs then you should make that clear and use them consistently.
You rather confusingly used the actual magnification when mentioning the Olympus 40-150mm. For consistency you should have stuck with 35mm equivalence and stated its maximum magnification as 0.42x rather than 0.21x.
OK and so what?
There's a big difference between 0.21x and 0.5x magnification. There's not such a big difference between 0.21x and 0.25x magnification.
Personally I don't understand why you'd use full frame equivalent figures for magnification, while still using the actual focal lengths and apertures. Mixing and matching actual and equivalent without stating what you're doing is a recipe for confusion at the best of times, but you should at least keep it consistent between lenses.
0.42x at 150mm is still not what you need
Having "0.5x" at 200mm may well be better, but I think it's a stretch to say that it's needed.
You were arguing that adding an extension tube to longer lenses was pointless, but even a single 16mm tube would make more of a difference, taking the Olympus lens to around 0.32x (0.64x full frame equivalent) at 150mm.
400/280=1.42 working distance doesn’t change the 50-200mm has now a benefit with 2x tc the benefit is higher but at the end 400mm has too narrow fov to be useful
Personally I regularly shoot subjects like butterflies and dragonflies at 400mm. I often appreciate the additional working distance and background blur. It helps with scittish subjects, and can be essential when it's difficult to get closer, e.g. dragonflies over a pond.
The point is do you do that because you have a choice or because that lens is the only one you have? There is not much point arguing that something you don't have experience with is better or worse and besides some critter are larger than others.
I own the 200mm f/2.8, 40-150mm f/2.8, and 100-400mm. I actually think that all of those lenses work well for shooting subjects like butterflies and dragonflies. I'm sure the same is true of the 50-200mm, but all have their advantages and disadvantages.
The Olympus 40-150mm works with TCs, and is well suited for use with extension tubes or close-up lenses because of the somewhat shorter focal length. Personally I really appreciate that it doesn't extend when zooming. You can use it up close, in a tight space, without worrying about bumping anything with the end of the lens when you zoom in and out.
The 200mm f/2.8 is sharp, fast, and has TCs to provide greater magnification and reach, but it's a relatively heavy lens and doesn't offer the convenience of a zoom.
The 100-400mm is slower, but offers a versatile zoom range and has more reach than anything except the 200mm + 2x TC.
To me they're all close enough in magnification capabilities that the difference isn't really a big deal.
I have the 50-200mm and the 100-400mm and both tc. The 100-400mm is a heavy lens to go around bugs the 50-200mm even with the TC is lighter and more useful as you can get closer so at the end you achieve more effective magnification
The weight difference is certainly an advantage for the 50-200mm. I would argue that not having to get closer can be an advantage of the 400mm. The 50-200mm + 1.4x TC won't offer more effective magnification if the limiting factor is how close you can get to the subject. Standing at the edge of a pond, the 400mm will let you fill the frame with something a bit further out over the water.
The 100-400mm is a very useful lens but I take the 50-200mm with TC 1.4x any day of the week compared to the 100-400mm at 400mm
The point on the background blur is not an issue whatever you shoot and the 50-200mm achieves more magnification AND is a faster lens so the background is actually more blurred again you need to take the shots to see it for yourself
A longer focal length provides more background blur at a given f-stop and magnification. If I need to stop down to f/9 to get a whole dragonfly in focus when it's filling the frame, then I'll need to use f/9 for sufficient DOF regardless of the lens. Due to the greater compression, 400mm 0.25x f/9 will provide more background blur than 200mm 0.25x f/9.
If you don't understand that then I'd suggest you take your own advice: take some shots with the same subject/background at the same magnification/f-stop, and see for yourself what difference changing the focal length makes.