Superman's strength reduced by a third? I don't think so...

[Super Monkey]

I'd say the jury is out and won't be back in. True, Superman believed it was real, but whether his actions were driven by his own ideas or by Ching's suggestions is an open question. Though it seems like a bit of a no-brainer to me. I mean, Superman accidentally destroying the world? The proof of that particular pudding is in the eating. He's faced opponents at his own level of physical power before and still always managed to be reasonably careful about collateral damage.

He even faced foes even more powerful than he and yes this was in the Sliver Age folks, and still manage not to destroy the Earth in the process. There were a lot of logic and plot holes in that tale, which is why it was re-conned as soon as it was over like it never happen. So the sandman tale goes in the same pile as the infamous "The Master Mesmerizer of Metropolis" even if it is more fondly remembered.

[Captain Kal]

We are talking about a guy whose punches could easily shatter a planet, withstand supernovae, and casually blow out a star like a birthday candle.

Surely such a powerful being cutting loose on Earth with like powered beings should easily destroy our poor planet -- unless they were being careful not to do so both via how they directed their attacks and by absorbing the collateral energies themselves via the principles that enabled them to generate seemingly-unbounded power from nothingness in the first place.

I mean, if he really whacked a guy/object with a planet-smasher, that energy has to go somewhere (if he/they didn't neutralize it).  Our punches end up as shockwaves (weak ones) and waste heat.  His super-punches would casually vapourize our planet -- even if they didn't hit the planet directly but from the ambient atmospheric effects of the impact.

Yeah, as Gary insightfully pointed out, he normally does have enough wisdom and control to avoid collateral damage in a super-fight.  That does lead us to believe I Ching was messing with Superman's mind to force him to come to that conclusion.

[Captain Kal]

What's the deal with the 'permanent brain damage' anyway?

In most other stories where Superman is injured, his body super-heals itself to its natural state.

He damaged his leg cartilage jumping out of a red sun sphere of Dr. Light's once, and his legs instantly repaired themselves.

He was forced by Please-Power to punch himself and his bruises healed in a matter of minutes.

Duplicate Boy healed from injuries inflicted by the Persuader's atomic axe by Saturn Girl making him duplicate Superboy's invulnerability and healing powers.

That's just off the top of my head.

Post Crisis, he's similarly healed pretty rapidly a number of times.