I've been operating my backhoe attachment A LOT for the past year-and-one-half. I run it at idle (1,000 rpm's) to 1400 RPM's. Smooth and easy. I'm aware of no damage to anything related to hydraulics of the engine. I also perceive no difference in hydraulic strength with varying engine speed - everything takes longer, which suits me fine.
I run both my backhoes in that same range - basically 1000 which is just off idle.... to about 1500/1600 RPM. I've been doing that with hoes for over 50 years. Any higher RPM and we maybe get a slight bit more work done, but it gets done in herky/jerky fashion, slams things around, and is generally less fun with more wear.
Hoes are all about hydraulic flow, so if the hydraulic pump is half way good there shouldn't be all that much difference in backhoe power regardless of the RPM. That also means that as long as you are up above absolute idle RPM you shouldn't be able to lug the engine much or at all with the hoe anyway.
IMHO, it just isn't necessary or desireable to be cranking up to full PTO RPM to run a hoe. Save that for mowing.
Take the time to get good & smooth instead.
Hints: Nothing wears out a backhoe like slamming it around. Especially slamming it around with the swing stroke.
And do NOT side sweep to move heavy loads. Side sweeping is for light loads & for smoothing.
On the other hand, it is perfectly reasonable to use down pressure with a frame-mounted hoe to lift the back of the tractor for repositioning, just as long as you don't have wheel weights or tire fluid. If you do, that's your call.....
While learning, go slowly and use slight movements when using down pressure combined with side sweep for repositioning or crossing a ditch.