The setting you are referring to is it:
Enable source side disk cache: You can optimize the signature lookup process by setting up the local source-side cache on the client or source MediaAgent (for DASH Copy). After you set up the local source-side cache, the signatures are first looked up in the local source-side cache. A remote lookup is initiated when the signatures are not available in the local source-side cache. The remote lookup reduces the response time for a signature comparison in a network with high latency
This will definitely be helpful when there are high latency across the network involved in the DASH Copy. If the Storage is not the bottleneck then using the above option might help to reduce the lookup resulting in better DASH Copy performance
In regards to the slow read performance that you have mentioned, when carrying out Disk performance test (outside of Commvault), are we also taking into account the Storage's Cache capability. In most scenario when testing Storage Performance Vendors might not take into account the Storage Cache (using in-memory or SSD), so initiail writes/read will be cached and will perform relatively good.
However when reading from the Disk/RAID, the associated Blocks needs to be promoted to the Cache and then traversed to the Front-end bus and then presented to the Host. If there are latency at the Disk/RAID Level then the read IOPS will be poor.