If anything, that works to the album's disadvantage. Since Opeth didn't kick into overdrive on Damnation at all, it gave them a more limited palette to work with, if you will. The production, IMO, is the saving grace of the album. Take some simple clean passages, add a sprinkle of production layering, and you have yourself a very simple soft rock album with enough texture to listen to over and over again.
I would still love to know what effects are happening in Mike's vocal chain on that album. Very spacious without sounding overly reverberant. I read somewhere that SW dislikes verb, so I'd assume it's a subtle use of delays with low-pass filters.