You're correct in that your percentages only apply to the finished size of whatever it is you're enlarging.
After you've enlarged it, THEN make sure you have a 1/4" seam allowance.
So if the picture is a 4.5" snowball block (which would finish at 4" ) and you want a finished 8" snowball block, then increase by 200%.
The seam allowance will be too large - it doesn't matter what it is. It also doesn't matter if it goes off the paper.
Just that you measure, mark and cut it at 1/4".
I don't know if you're talking about paper piecing or machine piecing or applique so that's why I'm using the Snowball as an example.
If you were cutting templates, then you would cut the enlarged finished size from the paper, and when you cut the fabric, you'd add the 1/4".
Make sense?