You're right on the concept, but I cant commment on the math.
Other thing to take into consideration is whether the rating is done with a single line, or (and I forget the term here), doubled back to in essence have it pulled by 2 angles of the line and double the stated capacity.
I have a princess auto electric hoist in my garage. Twice the size of my atv winch and a fraction of the rated capacity, as it is designed to lift straight up.
Of course this is all based on new or good working order equipment.. frayed lines and rusty fairleads could mean less capacity and a dangerous situation.

I was never too successful in Math but I think it might be logical that a 650 pound ATV just might find itself airborne if it was trying to vertically lift anything heavier than itself, regardless of the winch capacity. An ATV mounted winch is really designed to pull the machine on which it is fastened out of mud-holes, pressure cracks, slush fields or similar locations. Anyone who has tried to winch another ATV out of such predicaments has likely experienced that all you do is pull your own machine towards the stuck vehicle unless you somehow anchor or tie off the pulling ATV.
As an aside, a respected local ATV sales and service centre refuses to mount anything but WARN winches. I've seen the cheap winches from Canadian Tire and Princess Auto in action on Simcoe but usually not for very long. They simply don't stand up to serious use at all.
OOPS!! Just reread the original post and realized it's not necessarily about ATV winches. Mea Culpa.

I had to replace my Warn 2500 so I went with a Titan 3500 (no longer available). I'm happy with it so far and I went for the synthetic cable. Well worth the couple of extra bucks for it!!! It's much nicer to use, more like rope than a cable.