i have read alot on these forums about peoples concerns about the use of diplomatic currency outside of AI bribery. what i propose is simple and can make diplomacy useful in multiplayer matches as well as give it value to players so that the AI can barter with it as well.
simply use it in game as another resource needed to produce things. example.
you want to build a lumber mill, ok it cost you 40 gold. however if you want to sell a palace or some other high level improvement to the people. have it cost some diplomatic currency along with whatever it cost. maybe add a few new improvements that your people maybe wary about. use the DC to reassure them.
example 2.
you want to hire arvix. hes a decent fighter and rather mercenary, gold will suffice for him. however if you want to hire reygre the immortal berserker then its gonna cost you some gold PLUS a lot of diplomacy to get him on your side. also if he is killed then he is resurrected back at a random spot on the map with a complete loss of memory. he no longer works for you and you gotta hire him again if you want.
perhaps you run across a powerful druid and being a druid has no need for money, but diplomacy can get her to your side, but it looks like you killed the mother wolf instead of save her. you are gonna hae to spend DOUBLE the diplo points to get her to your side now.
you meet a dragon and it will cost you a lot of diplomacy just to get him to talk to you about the quest he wants you to go on to gain his favor.
there are lots of stuff that you could throw a little diplomacy at to help you along, AND make the resource more valuable as a trade resource for human players as well.
it wouldn't take any retooling of the system to implement this, a little programming i suppose(unless you want those diplo specific improvements).
just my 2 cents.