Directing more light directly to the sensor will "fool" it into thinking the subject has enough light and will cause the flash tube to deliver less light.
Changing the ISO will also "fool" the sensor into thinking the subject has enough light for the film speed it "thinks" you're using. This, as you suggest, only works if you can dial in a faster ISO than the film you're actually using.
I took a quick look and all my really small flashes do max out at 400 on the dial. My Vivitar 3500 does go up to 800.