It appear what you described is the custom transparency mode which in
reality pretty close to an OTC hearing aid. The hearing aid upgrade in
18.1 includes hearing test and updated algorithm to received approval as
OTC hearing aid device, probably with better hear aid performance and
functions. Are you saying that by upgrade to 18.1, the custom
transparency will be blocked?
It's not something I have tried as I am still using IOS 17.7.1.
I have read that you cannot use your Audiogram in Transparency Mode after you update to IOS 18.1 in countries where the Hearing Aid feature has not been approved. It's certainly upset a lot of people who have been using them for a while. The feature was first available in September 2022 when the AirPod Pro 2s were launched. It was orginally launched in the AirPod Pros back in 2020.
What I don't know is if the Custom Transparency Mode is still available after upgrading to 18.1 in countries where the Hearing Aid Feature has been approved. It might be worth asking somebody who is using them in the US.
The one thing I do know is that Apple have simplified the menus dramatically in the update. Lot's of settings seem to have disappeared including Loud Sound Reduction that I really like in 17.7.1. According to the Apple availability chart the Hearing Protection feature is only available in the US and Canada.
Are Loud Sound Reduction and Hearing Protection the same? I don't know.