"Wetties" -- that's a new one on me, even in 12 years of EV experience.
I heard them called "Floodies" before, but never "Wetties" until now.
Yes, your output capacity on the label (as with anything electronic) should always be assumed to be PEAK unless specifically marked as RMS.
Continuous current handling of your batteries, controller and motor will always be far less than the PEAK rating. In fact, your motor probably won't hold up to 500A all the time, but can probably take it for 5-15 minutes. I'm not sure the exact continuous rating of that motor.