Diplomat as a village needs a lot of non-terminal handsize reduction help. This does exist and can work extremely well - Warehouse, Dungeon, Artificer, Crace, Upgrade, and the like can all very easily drop your hand size down without needing a starting action to kickstart things. Artificer/Diplo works pretty well - gain a Diplo, play Diplo, Play the Diplo you just gained -> have 3 cards and $1 to buy another artificer. More generally, pretty much any board where you have a non-cantrip, non-terminal you want to mass can make diplomat work well to jump start an engine.
However, on most boards diplomat only really shines if you have both a way to reduce hand size and some other village. If you are massing non-terminals then the +2 actions of Diplo are not that useful. A number of cards can give you both - Nv, Sqr, and Hamlet can all work decently - cheap villages and cheap + cheap draw can often setup a nice simple engine; adding in something for payload (like say Hamlet/Diplo/Conspirator. With the right setup Diplomat becomes an activated City (or a penalty-less Lost city), and this can be extremely good with discard for benefit. Beyond Artificing, something like Vault or Count can combo up quite nicely (Vault/Nv/Diplo can churn a lot of coins; every Vault/Diplo combo can basically give you a Gm for $8).
Another fun option is with Borrow, you can get a bonus action just by always taking the penalty card. This can allow clutch two card combos (e.g. Discard -> Masq) or just allow you to accrue actions with other limited source (e.g. Nec/Diplo can let you play Goons x3 for 12 VP + whatever green you want to buy). Similarly Diplo makes Opost easier to kick off.
With attacks out, Diplo is just an insanely good enhancement to engine reliability. You get a free warehouse play, get to draw back $5 and start with 2 actions for ANY attack type. Even terribly weak things like early game Fteller, late game Cpurse, or deck inspection. She is particularly good if your opponent can be forced to play dead attacks late game (e.g. curseless Witchs or Hags via Golem).
Using it as a Moat is going to be reasonably common. Moat is not a bad card when you can pick it up for cheap (e.g. Iw, Wshop); being 2x as expensive is bad for when you want to buy a $5/2 combo, but it still works well with a lot of gainers (aside from cost reduction, Hermit, and Knights; Diplo should be viable most anywhere that Moat is viable; though the Remodel family may be more marginal). Diplo works extremely well with multiple plays (Rc, Tr, Kc, etc.), just like Moat, and is generally superior against non-junking attacks when there are equal opportunity cost. Certainly there are times where a higher cost is better - like with Upgrade late game.
In short, Diplo is large enhancement in reliability if you can go down a card without first spending an action. As draw, Diplo is weak, but viable on a large number of boards. As a reaction, Diplo will goose the latter portion of the early game to give a lot more "half-engine" hits and much more quickly get a proper engine going - enough so that I would be hesitant about buying weaker, but sensible attacks (e.g. Cpurse).