So, I have a character who is using the Atronach stone this playthough and I had a question on how it worked.

It says that "Magicka regens at 50%", so I am guessing that it reduces your magicka regen by half regardless of the total number. Right now my regen is 200%, so I'm guessing that my regen rate is 100% thanks to the flaw.

Or does it reduce it by 50%, so my magicka regen is 150%?

I am curious as to how this works.

It reduces by 50%. So your regen would be 150%.