Hmm. I think you're right, although it's a little exaggerated. Using PCGen, I was able to create a level 3 bard that had a +23 to diplomacy. To do it, I took:
+6 to diplomacy (max)
+5 to bluff (+2 synergy bonus to diplomacy)
+5 to knowledge/nobility (+2 synergy bonus to diplomacy)
+5 to sense motive (+2 synergy bonus to diplomacy)
+3 to diplomacy from skill focus feat
+2 to diplomacy from negotiator feat
+4 to diplomacy from charisma
+2 to diplomacy from half-elf race
To make a combatant go from fighting to "merely" taunting you and demanding that you leave is a DC 25 check if you want to do it one round.
With a +13 (23 - 10 for rushing diplomacy), a roll of 12 or better would succeed.
To make a combatant go from fighting to feeling neutral about you, so that you are free to come & go without danger is a DC 35. You couldn't roll it at level 3, although natural 20s always work, so that'd be the one shot.
So, hmm. To me, that's not really awesome, but it is better than I expected. At level 8, you'd have another 6 points in it (5 from leveling up and maxing the pips in Diplomacy as you go, plus 1 extra assuming you put both stat points into charisma). At that point, it starts being useful. You'd only need a 6 or more to "calm" combatants down to merely shouting obscenities at each other, and with a 16 you could make them feel neutral about the whole thing.