My understanding does not at all match that.

In sum: after Inchon and before the Chinese intervention, nobody was holding MacArthur back because he seemed to be carrying all before him. After the Chinese intervention, MacArthur was supporting or calling for retreats, not Washington. In any event, nobody above him in late 1950 felt that they were capable of controlling him anyway. The only holding back at that point was in not massively expanding the scope and effort there, which would have either fatally weakened the US elsewhere, or would have called for a massive war effort from the US that I believe Truman could not have gotten under the conditions.

MacArthur and most of his subordinates in Korea were trying very hard to take North Korea, and they would have done so if he could. They thought they were succeeding after Inchon until late in 1950. The Chinese had their first attack in force, disconnecting ROK II Corps, and savagely checking US 8th Army and other forces in the west. Walker realized his position was precarious, but higher-ups were sanguine. The Pentagon was "in almost superstitious awe" of MacArthur (Ridgeway, The Korean War, p. 61) and refused to order a retreat even though they'd earlier said that Chinese entry would force a retreat. On 3 December, there was a Joint Chiefs/Sec'y of State meeting that had a feeling of doom -- about a week after the second major Chinese intervention.

"Why", I asked [Hoyt Vandenburg], "don't the Joint Chiefs send orders to MacArthur and tell him what to do?"

Van shook his head.

"What good would that do? He wouldn't obey the orders. What can we do?"

At this I exploded.

"You can relieve any commander who won't obey orders, can't you?" I exclaimed. The look on Van's face is one I shall neer forget. His lips parted and he looked at me with an expression both puzzled and amazed. He walked away then without saying a word ...

Going back in time: The advance continued in November though some subordinates were worried and dragged their feet, in the knowledge that it was not possible for 8th Army and X Corps to meet and protect their flanks. Walker with 8th Army was rebuked by GHQ for holding back. 1st Marine Division on the right secured their path carefully despite prodding from X Corps originating from MacArthur. The Chinese attacks in late November and early December again crushed the ROK II Corps, killed half the US 2nd Division, causing some "sauve quit peut" pell-mell retreats, and 9 enemy divisions surrounded the 1st Marine Division (forcing not a retreat, but a fighting advance to the south). After a few days of losing, MacArthur, emphasis MacArthur, on 28 November gave Walker permission to retreat further to keep from being outflanked, and remaining forces retreated.

When Ridgeway took over X Corps in late December, "MacArthur had informed the Department of the Army that his current planning provided for 'a withdrawal in successive positions to the Pusan area'"! But his orders to Ridgeway was to hold as far north as he could, preferably holding Seoul though not at the cost of making it a citadel.

So the US was doing nearly everything it could to advance, MacArthur was in total control over the advance and the retreat, and there was no pressure from above, even when there should have been.

Ridgeway mentions more things that they could have done. (1) Atomic attacks on China or the USSR. You can imagine the humanitarian and practical objections. (2) Attacks on airbases in China. Leaving aside the question of how well they would have succeeded, where the US would have gotten the air forces, and how it would have denuded forces elsewhere, "Some commentators have forgotten that we had nearly complete air superiority in Korea through a sort of unwritten agreement that left our airfields in Korea and Japan immune from attack by the Chinese." (3) Attacking from Taiwan into southern China, where MacArthur believed they were weak. Yeah, right.

At the end of December, it was MacArthur who told the Joint Chiefs that, unless other conditions changed (no major reinforcements, no blockade of China, no air attack on China), "the command should be withdrawn from Korea just as rapidly as it is tactically possible to do so." (p. 91) "The issue of pulling out was settled quickly. With his customary incisiveness, President Truman decided that the United States would evacuate the peninsula only if we were forced out by military necessity. He left with MacArthur the authority to withdraw his forces if he felt he must ..." (p. 92)

I regret that I can't find Keegan's The Korean War or some other sizeable source to cross-check. Ridgeway seems pretty even-handed, but he was a participant.

As for more actions, like major reinforcements, blockade, air attack, and such: before the major Chinese intervention of late November 1950, the US saw little need for them, because the US appeared to be triumphing. MacArthur and some subordinates were even thinking of "home by Christmas". After the major Chinese intervention: If the US used existing forces to expand the scope, it would have gravely weakened them everywhere else, and the US greatly feared the Soviets taking advantage by advancing or even attacking. If Truman had tried to build up to World War 2.2, I think he would have been shot down at home immediately on multiple grounds, not least fear of World War 3 with the Soviets. And given deep Chinese interest, deep Chinese reserves, deep Chinese boots on the ground, and steep Korean terrain, I have severe doubts that it would have worked anyway. Eisenhower didn't see fit to do any such things, it should be noted.

At the start, Truman had actually significantly contributed by deciding immediately to resist strongly the invasion, even though the US had few forces in the area and they were peacetime forces, and even though the US had arguably considered South Korea to be outside the defence perimeter. He also pushed UN and coalition warfare. Truman was not at all weak, not trying to lose, not trying to avoid winning. He did calculate gains and losses globally, and the art of the possible at home.