How to hook into adding watchdog entries by other modules?
Unfortunately hook_watchdog doesn't provide a return value which could block the insertion of the log entry in the database.

Note though that the responsible module for inserting the entry in the database is dblog. You could disable that and write your own implementation of it, although you'd have to replicate lots of functionality.

Another idea is to have a frequent cron job deleting the relevant log entries from the database table.