That's a decent idea. My AC at my workplace actually isn't painfully loud in the low setting. It's still loud, but at least it's tolerable.
BTW, my outdoor AC unit was very loud (outside) until I had my HVAC guy install a noise blanket over the compressor, and after that it was much quieter. I wonder how much that would work for a window model, and if it does work, why they don't do that.
Well I'm not knowledgeable enough to question the opinion of a pro but what comes to mind is compressors do a lot of work and get very warm doing so, I would wonder if the "blanket" would potentially decrease it's lifespan, maybe the blanket they use is designed with the ability for ventilation..
EDIT:..I found this from a blanket mfgr's website, it seems that the blankets won't harm a compressor,..
"
Will a Sound Blanket overheat my compressor or air conditioner?
Usually when you put an insulation blanket around a motor it will overheat and cause damage to the motor. However, the compressor motor in your air conditioner is internally cooled by a refrigerant so it will never overheat when insulated. Our lab tests show that the internal temperature of the compressor only increases by 2%, which is negligible.
Sound blankets are a conventional form of air conditioner noise reduction, and many air conditioner manufacturers install sound blankets as the first step in solving noise problems. Sound blankets will not affect your compressor's life expectancy or performance. In fact, they have a beneficial effect in that theyinsulate the compressor and maintain a more consistent crankcase temperature. This provides for easier starting and prolongs the life of the bearings. The sound blanket also stops condensate from forming on the compressor on hot humid days."