Adding the sponge in the intake will decrease it, yes. Do you have a big enough sponge to use scissors and cut an opening inside the sponge, and slip it over the outside of the intake instead? That will help with the flow. Putting it inside the intake will force the sponge to compress, giving you less flow.
55G Filstar XP3 - 16" Fire Eel
75G Medium Planted - Filstar XP3 Low Light - Established Feb 2006