Seems to me like a bizarre thing to do just to add 1" of barrel length, especially considering that the XD and XD(M) together cover just about every combination of grip and barrel length that you could ever want.
I can't imagine that 1" is going to make that much of a difference, but everybody has their preferences. Is the chop-down idea just because you want to reuse your existing magazines? Why not just sell your XD Subcompact and get an XD(M) Compact (same grip size, .8" more barrel and slide, better barrel, interchangeable backstraps, some other tweaks)? I am quite sure that .2" isn't going to make much difference.
If your XD Subcompact and magazines are in decent shape, they should net you more than half the price of a new XD(M) Compact and magazines, and your total investment would not be much more than the cost of the custom work, and you'd have a brand new gun.