A friend at my flight school mentioned that you can get hired at Cape Air as a FO at 300TT if you hold a CFI certificate. Is this true? He said the CFI certificate fulfills their insurance requirements. I'm currently at 350TT and am taking my CFI checkride soon.

Don't know about that but according to the site you can get hired as a FO with 500 hours. Also it says preferred "One year of full-time instruction". But again, that's 500 hours.

I have always heard 500 is a hard minimum - from both recruiters and pilots alike. A loophole might exist for the right candidate.

I believe you have to be a part of one of the partnered University flight programs to begin ground school under 500TT other than that 500 is a hard minimum.

There has to be something more to it. I applied at 400TT with a CFI, CFII, MEI and got the "We are looking for these minimums" response.