Coincidentally I just happened to shoot some 40D 1600 ISO test shots today - just firing off randomly round the house. Conditions outdoors were overcast so it definitely wasn't strong lighting indoors. There is a series of images shot with HTP off and another series with HTP on. There's a good mixture of highlights, midtones and deep lowlights in the pictures. The images have been uploaded to an online album at 25% size, to deter anal pixel peeping. The images were shot raw and processed to jpeg in DPP with no NR whatsoever. The only edit tweaks were to set WB to cloudy, picture style to Standard and sharpening to 3.
Here's the album....
http://picasaweb.google.com …00ISO?authkey=3AKLDhhhL34
My understanding of High ISO Noise Reduction is that it is only applied to jpeg files, so I leave it turned off. From what I've read it only affects chroma noise, not luminance, but will slow down raw shooting because the NR does get applied to the embedded preview image, although not to the raw data itself. It is thus a redundant but annoying function for raw shooters.
I agree with the others - nail the exposure, or better yet, shoot raw and expose to the right, and you should have little to worry about.