I didn't see anyone mention this but diplomacy takes 1 minute on average it can take less time but at severe penalties the rule reads

"Action: Changing others’ attitudes with Diplomacy generally takes at least 1 full minute (10 consecutive full-round actions). In some situations, this time requirement may greatly increase. A rushed Diplomacy check (such as an attempt to head off a fight between two angry warriors) can be made as a full-round action, but you take a –10 penalty on the check."

Don't forget that with the minus 10 they also get less time to speak and can get addition penalties for lack of good dialog you can only say so much in 6 seconds.

Also this example specifically states two angry warriors getting ready to fight each other not the party that would be a much larger penalty and if he doesn't win initiative the monster should not stop attacking I would treat it similar to the bards facinate ability once combat starts it breaks or is not feasable.