But only for Balloon Artists. I think it affects Sticker Bombers too, but very rarely will they sometimes get to plant stickers. Sparkle streaking and overproductive responses are unaffected.
The reason seems to be that the default standing around and "relaxing" job (aka doing nothing) has a higher priority than the "Joy Reaction" job when proximity settings are enabled. You can see it in the attached screenshot.
1) Enable the "Enable Proximity" setting
2) Have a valid recreation room
2) Trigger an overjoy response from a "Balloon Artist" duplicant