Now the question: Is compression bad, especially for music? I´d say: No, but you have to be careful!
As for speech, it is said that the knee-point of compression should be above speech level, because speech is harder to understand when compressed.
What I do not understand: In most hearing-aid software, you set the amplification for 50 dB, 65 dB, 80 dB input levels. When I think about that, you should get two knee-points!
As for music, one must not forget that recorded music is always compressed. By using a microfone alone you get some (unwanted) compression. Even classical recordings are compressed a bit, because without compression one would always adjust the volume when listening in a quiet environment (like your living room).
Then people buy super-expensive valve-amps, and many think that they sound fantastic. But what do they do? They compress, and they add harmonic distortion.
What I am trying to say: Of course, compresion produces distortion, but it doesn´t necessarily sound bad. The distortion that really sounds bad is clipping.
One problem arises because of the open fitting of modern hearing aids. For frequencies below 250 Hz, you usually hear more “direct” sound than sound from the hearing aid. Below 100 Hz, you only hear direct sound, because the hearing aid cannot amplify that with an open fitting.
If you listen to dynamic music with bass in it, you will get the feeling that louder parts sound “dumb”, when your hearing aid is compressing a lot. This is because the low frequencies come through directly, whereas the high frequencies are amplified less at louder levels.
So what you can do is to reduce the overall amplification a bit and then reduce the compression just so far that the music you want to hear sounds good. This is a lenghty process, I had very much success by bringing some CDs to my audi.
