apoptosis said:
Can the NPC use diplomacy to get something from the characters?
No. PCs are just as immune to Diplomacy as they are in the standard rules. But that's a completely separate issue. You could decide that NPCs can do the same thing to PCs, if you can get your players to agree to it.
Can the price end up going higher than if you fail a diplomacy check?
Yes. If you fail by 5 or less, the NPC will make a counter-offer, giving some indication of what it would take to make the deal work, and generally getting the better end of the deal. Fail by 6 to 9, and the NPC just isn't interested, but may respond positively to a better offer. If you fail by 10 or more, the NPC will cease negotiations permanently.
If not, then we are somewhat back to the PCs not really risking anything in the challenge. They would either get it for what was originally asked or they get a bargain.
Now i am only quickly reviewing the scenario but honestly the challenge seems very ungratifying to me. It is usable, but rather uninteresting (change the scenario to a combat scenario)
It is basically just a simple DC check to lower the value of whatever you want.
Well, it turns every negotiation into a gamble where you try to secure the lowest price possible without making the deal go sour, or alternatively, secure the lowest chance of failure possible at the lowest price you can get away with. You increase the risk of failure by offering less than the prize is worth, or by trying to negotiate with people who don't like you. You decrease the risk by offering more than it's worth.
If you absolutely, 100% must get into the secret meeting or else the king will be assassinated, you can bribe the living hell out of the doorman and increase your chances of success, but unless you make it seriously worth his while, you have a chance of failure. So you can lower that DC, but it'll hurt.
Success is not cost-free. Either you spend resources directly tempting the NPC into taking your offer, or you spend character resources on feats and skill points that provide bonuses to Diplomacy will boost your chances of success. Even then, all you are doing is reducing the costs, not eliminating them. Perhaps you can't talk the doorman into letting you into the secret meeting for free, but perhaps he'll take 100 gp instead of 200 gp as a bribe. On the other hand, perhaps you'll botch it, or seriously underestimate how much is "worth his while" and end up failing with a pretty good roll.
It's a really flexible system, and I like it a lot. I also like stakes-based systems, but this system is, for newer players, more intuitive and to-the-point. Instead of gambling an outcome versus an outcome, you gamble a resource against the NPC's desires and your talking ability.