If the service is compromised, you can't trust your TOTP secret (the little binary string from which your TOTP codes are generated) either! The protections TOTP provide in this scenario are all based on magical thinking; that it "feels" secure. But really, with respect to a specific service, if they're compromised, your credentials are worthless and need to be reset wholesale.
User creates a strong password in 1Password when signing up for a service. The password is used only for this service. The service stores all usernames and passwords in plaintext. These credentials are compromised without the service knowing. If I'm using 1Password's TOTP then, I think, an attacker is prevented from logging into the service with my credentials. If I'm not using 1Password's TOTP then the attacker can login to the service.