Is it cheating to us Diamond Equipment with my RTTS pitcher/hitter?
No. You're using the tools given to you by SDS. Cheating would be if you were enable to utilize a glitch to equip multiple pieces to the same slot. Like 3 bats for a +21 power boost.
Personally I equip all my player right after the showcase. i mainly do it for cosmetics, the name brands look better than the generic. The boost for me is just gravy.