Reject a paper based on relevant but pointless research direction
Generally, as a reviewer, you are being asked for your opinion of the paper's correctness and its significance (importance, level of interest, etc).  Evidently in this case you think the results are not significant or interesting enough to publish in this journal, so you should say so in your review.  If possible, you should explain why you think so: the authors don't give any compelling applications, the results are only a marginal improvement on what's known, etc.

This isn't reason to decline the review.  Thinking the paper is uninteresting isn't "prejudice".

If the editors don't agree with your assessment, they are free to disregard it and publish the paper anyway.  But you do have a responsibility to give your honest opinion.

In fact, I would suggest that you evaluate the paper's interest before you start to carefully check its correctness.  If you believe it's not significant enough to publish, even if correct, then you can so inform the editors and save yourself the time. 

There are some exceptions, where the editors may only be interested in whether you believe the paper is correct.  Perhaps they are already convinced it is sufficiently important (from their own opinions or other reviewers), or perhaps "importance" isn't a criterion for publication in this journal (e.g. PLOS One).  If that's the case, then the review invitation should make this clear; otherwise, do consider the paper's importance as part of your review.