EDIT Title has been edited.
Let $C$ be a category, and $$\hat{C} = [C^{op}, (Set)]$$ be its free cocompletion. Despite its name, the free cocompletion of free cocompletion is not equivalent to the free cocompletion in general. Namely, $\hat{C} \not\simeq \hat{\hat{C}}$. For example, take $C = \{*\}$. [1].
There is a better cocompletion, called the Cauchy completion $\bar{C}$. If $C$ is small, then we have $$ C \hookrightarrow \bar{C} \hookrightarrow \hat{C}.$$
By theorem 1 in [2], it is better in the sense that $$\bar{C} \simeq \bar{\bar{C}},$$ so $\bar{C}$ is actually a cocompletion, and also that $$\hat{C} \simeq \hat{\bar{C}},$$ so $\bar{C}$ provides what $C$ needs without changing it too much. After all, in many cases it's better to view $C$ as $\hat{C}$ [3].
Question
Is $\bar{C}$ the largest category between $C$ and $\hat{C}$ whose free cocompletion is $\hat{C}$? More precisely, among all categories $D$ with $\hat{C} \simeq \hat{D}$ and $$C \hookrightarrow D \hookrightarrow \hat{C},$$ is $\bar{C}$ the universal one?
Reference
[1] https://math.stackexchange.com/questions/3396276/presheaf-category-as-free-cocompletion
[2] Cauchy completion in category theory-[Francis Borceux and Dominique Dejean]