Yes, it's still loud an defeats the purpose of the .357 Magnum. It was designed to be a very high velocity round. That's how it got it's well deserved reputation as an excellent man stopper.
But when you water it down to 1300 fps, while that is still considerable speed, it's just not a real .357 magnum. Buffalo bore 9mm can match that with twice as many rounds, lower recoil, and lower flash.
I don't think any purpose is defeated, since it offers power you can't get in a .38 Special, with controllable recoil.
The .357 DPX is controllable in a 640-1 J-Frame and has comparable recoil to Buffalo Bore's 158 gr. LSWCHP +P. Which, by the way, chrono's at between 1004 and 1032 fps (depending on lot number and which 640-1 was used) from the J-Frame, and 1080 fps from the 3" M66.
This M66 is tight and produces higher velocities than my M586 4".
Considering that CorBon DPX 110 gr. is 1062 fps. from a 640-1, I'd consider the .357 version a serious upgrade from .38 Special-- even if it falls short of full power .357 velocities.
It's designed to offer a "midrange" load, and that's what it does. Just an option that's available if you want it. I carry .38 DPX in my 640, 642 and either .38 or .357 DPX in the .357 J-Frame.
As for noise, the .357 was used for a long time by many LE agencies with plenty of shootings-- indoors and out. Haven't done any research or run across much information on the hearing problems associated with OIS's.
Depending on the construction of a building, sometimes a lot of sound is absorbed indoors.
On the other hand, I know an individual who fired at a jackrabbit with a .357, in a ravine, without ear protection, and the noise was so loud and painful, he dropped his gun in the dirt and grabbed his ears. He doesn't remember what happened to the rabbit.