So worst case scenario is your brother is up $200k on you? Brother owes the estate $200k so i would think that gets sorted out by
PR when estate is divided up. Wouldn't your parent's will state that all notes are to be paid pack to the estate or subtracted from beneficiary's portion of the estate? A note is a note is a note. If interest is charged and reported correctly for the life of it (correctly) i don't understand where there is a problem netting the $200k. I'm guessing your real world experience has shown otherwise?
Interest has been paid, sort of. However your parents need to verify the IRS AFR as of the date of the loan. Any interest amount less than this is a gift IIRC and therefore may possibly be eroding their lifetime exemption. I don't recall IRS AFR's being less than 3.9% or so but i certainly could be completely wrong on that. Easy enough to check though.
Of course anyone else with this situation would be hearing that the worst case scenario is the various beneficiaries 'lawyering up' and pissing away the family fortune on atty's just to spite each other. Seems you at least have a leg up on that part of it.