Hi soundfulslumber,
My reply and the post I linked about mattress protectors both talk about the tradeoffs that are involved in your choice of a mattress protector so I’m not sure what part of your question I missed. You can also read more about the factors involved in temperature regulation in post #2 here.
It wouldn’t “negate” the benefits of wool in terms of its breathability and temperature regulation but it would reduce them yes because there would be less airflow through the protector which wouldn’t allow liquids to penetrate through the mattress although it still allows water vapor. You would be trading some moisture wicking, ventilation, and temperature regulation for the waterproof qualities of the protector and a reduced effect on the feel of the mattress. For those where water resistant is enough then one of the wool quilted mattress protectors that are water resistant rather than waterproof would probably be a better choice if temperature regulation is a more important factor than a protector that is waterproof and the higher cost is not an issue.
Phoenix