Lol - you made me look at the internals :) - the great thing about this is that you don't have to understand how it all works, as long as you render out to 480x320 resolution. There's a fair bit of conversion between co-ordinate systems going on (because cocos2d and the iPhone screen use different co-ordinates) but cocos2d does all the conversion for me.
I don't really understand your example, because I would never have a x=500 y=500 on a 480x320 resolution screen.
I will give you my real life example that works for me.
I have a 30 frame animation of a small fish that I rendered out into 480x320 transparent pngs.
I don't care what the coordinates of the fish are, because when I play those pngs back as a 480x320 movie, the fish jumps.
Then I put the pngs through zwoppel, and it removes all the transparency, leaving just the small fish in 30 differing size squares on the spritesheet. zwoppel also creates a plist file for me. The offsetX and offsetY fields in the plist effectively give the sprite's position on the screen.
For the first frame, in the plist file, the originalWidth is 480 and the originalHeight is 320 and offsetX = 148 and offsetY = -63.5. This is the offset of the fish within the original size 480x320 png. (I think in this co-ordinate system, the 0,0 point is dead centre, so 148 is to the right of center, and -63.5 is below the center line.
Anyway, when my sprite is created, cocos2d does a coordinate conversion (I guess to GL coordinates), which changes the offsetX (= 148) to offsetPosition.x = 347 and offsetY (= -63.5) to offsetPosition.y = 66.
So my spriteRect is (347, 66, 81, 66), which puts a small fish in the bottom right quadrant of the screen.
The touchPoint position is converted to GL coordinates, so when I touch at 379,107, the touch is successful.
In summary, Cocos2d and zwoppel do all the work. The plist file holds the four coordinates necessary to extract and display the sprite in the right place:
The x,y of the sprite on the spritesheet
The width,height of the sprite on the spritesheet
The offsetx,y of the sprite on the original size
The width, height of the original size
So as long as your original size is the same size as the iPhone screen (480x320), then the cocos2d/zwoppel positioning will happen automatically.