This may be the source of the confusion: The Feather effect reduces the weight of your current encumbrance. It does not increase your maximum.
glargg's right. Fortify strength will increase your encumbrance. Feather will reduce the weight of your load. The takeaway here is to apply feather once you are pretty heavily loaded up.
If it was meant to lighten your load, then (as an example) if your encumbrance was currently 200/300 and you equiped the Cowl, why does it change to 200/500 and not to 0/300? I get what you guys are saying, but Ive been playing Oblivion for seven years and Ive never seen the feather effect act this way. And even then, the base ring should reduce my weight by twenty-five and not three, correct?
I recommend taking a look at the UESP wiki segment on feather in the link below - especially the warning section. It makes my head hurt but, again, the take away is feather works best when applied once you are loaded up.
http://www.uesp.net/wiki/Oblivion:Feather
Internally it does do more like the 0/300. For some reason that doesn't show up properly on the inventory screen.
If you want to try to figure this out, http://www.uesp.net/wiki/Oblivion:Feather