It's quite simple. (forget about VAT as that would be added on later only for Argentines)

$500 gets converted at the official rate of roughly 360 --> 180,000 pesos.

You pay 180,000 pesos on your Visa / MC and get the MEP rate of roughly 960 --> $187.50.

FWIW, the MEP rate seems to have gotten much closer to the blue rate lately, and the blue rate has come down a bit. But it can be quite variable so you shouldn't expect that a $500 room is actually going to be <$200.

It's always good practice to avoid prepaid rates. (although to be specific, it actually says non-refundable, and many hotels don't charge you until check-in or no-show...) In this case, I would definitely want to avoid booking non-refundable, even though the process should be the same if the hotel wants to charge in advance.