Am I interpreting power supply current limit function correctly?
It is hard to determine from the datasheet alone and may need testing to be sure.

I have seen supplies similar to this one do one of two things when reaching the limit:


Gradually reduce voltage to keep load current at the limit (matching your conclusions)
Pulse the load.  i.e. when the current limit is crossed, voltage goes to zero then tries again a moment later, only to reset again immediately.


I see nothing in the linked datasheet that clues me into which of these two situations would apply.