The mod page says "- Adds a config option to be able to possess any mob without capturing their soul first," for 2.0.0 or above, however I can't find that in the config page, only the allow all mobs possession setting. How do I change this setting?

Yep, that's the option you are looking for. Just set it to "true" and you will be able to possess any mob as if they were zombies.

does this look right?

Does this require a world reset to work? I changed it to true but it didn't do anything (aternos server).

That option needs to be set on both client and server, then you need to restart both (but no world reset required)