Tape hiss is a characteristic of analog recording and is caused by the interaction of the magnetic particles on the tape and the electrical currents used in the tape heads and electronics. It's a complex subject but the general rule is that each time you make a recording of an analog recording you increase hiss by about 1.5 to 2 db. Each time you halve tape speed you increase hiss by 3 db. Each time you decrease the track width you increase the hiss by 1.5 to 3 db (all this depends on the quality of the electronics and tapes). Conversely, when you increase speed or track size, hiss goes down by the same amount.
Dolby B and S will not decrease treble when the machine is properly aligned and the tape is correctly biased to the machine. If you underbias a tape you get increased hiss AND dolby mistracking. If you overbias a tape, you get decreased highs and Dolby mistracking. If you get decreased treble on one channel, the Dolby circuit is misaligned OR the tape head is worn OR very dirty. Make sure the following circuits are all properly aligned for best results on all tape decks but especially on cassettes: 1. BIAS 2. Equalization (record AND playback) 3. Dolby "0" VU levels 4. Dolby tracking.
Mechanically, make sure the heads are not too worn, are aligned, set for correct azimuth, and demagnetized and cleaned. Make sure the capstan(s) and pinch roller(s) are clean and straight. Make sure the tape door and holders are not bent.
A cassette deck needs everything to be just right or performance will suffer.
Dolby DOES NOT REDUCE TREBLE when the circuits are properly aligned, the tape deck is mechanically and electrically sound, and the deck is properly biased and EQ's for the tape being used. Don't believe me? Try a properly set up Dolby B or S in an A-B comparison with the source. When everything is right, it works spendidly. Yes, when you switch off the Dolby on an encoded tape, it does sound brighter and, to some listeners, better. That's fine but that does not mean a properly functioning Dolby unit is cutting highs, it just means you prefer the brighter sound. However, a misaligned or malfunctioning circuit will sound worse.
Go to the Dolby Labs website for a tutorial on how Dolby works. It's a complicated process but a great boon when used properly.
I personally have little use for Dolby C. It works great on some decks but poorly on others AND is so deck dependent that a "C" encoded tape that sounds great on one machine may sound positively awful on another. Dolby B and S are much less sensitive to machine differences and, when not overused, can sound fine on many different machines.