Problem is there is no room for growth. As fish grow they will produce more waste. Thus having more impact on the biofilter. Usually when fish capacity is calculated the 'adult' size of the fish is used.
Absolutely. I agree. What is your pH level? You will either have ammonia or ammonium depending on your pH. I would think, if it's a new kit, that the ammonia test results would be valid. Have you added anything to bind the ammonia such as Ammo Lock? If so, the results from a test that uses nessler reagents will not be accurate. I would, if the LFS will go along with you, return about 1/2 of the fish...at least until the tank cycles. Then I would evaluate the bio load and go from there. JMHO.
Logan J