As for the Cleave effect on mirror images :
From DD 3.5 main FAQ from Wizard.Are the multiple figments from a mirror image spell legal targets for cleaving? That is, if you have the Cleave feat and you hit an image and destroy it, can you then attack another target within reach (such as another figment
from the spell or perhaps the spell user)? What about Whirlwind Attack? Can you use this feat to attack all the images around the spell user? What about spells that allow multiple targets, such as magic missile? Can you aim magic missiles at different images?
For all intents and purposes, the figments from a foe’s mirror image spell are your foes. You aim your spells and your attacks at the figments just as though they were real creatures. Any spell you can aim at a creature you can aim at an image. When you use a spell that allows you to select multiple creatures as targets, such as magic missile, you can choose multiple images as targets.
If you have the Cleave or Great Cleave feat, destroying an image with a melee attack triggers the feat (and your cleaving attack might well strike the spell user instead of another image). Likewise, you can use Whirlwind Attack to strike at any image you can reach. A Whirlwind Attack almost certainly will allow you to strike once at the spell user.
But I totally understand that you do know the rules far better than the guys who wrote them...
And for the position of the images :
From of course the same source....Is there a way to decide which squares the figments
from a mirror image spell occupy? Or do the images
distribute themselves randomly? If it’s the latter, how does
the DM decide where they go?
Although the spell description says the images from a
mirror image spell always stay within 5 feet of either the user
or another image, it’s easiest to assume that all the images
occupy the same space the spell user occupies. Any attack that
can reach the user’s space can affect an image.
But they are surely wrong since you are right... or don't believe it othewise...
As for the bonus to diplomacy it falls under the circumstancial bonuses part that a DM can allow as he wants to adjust to the particuliar conditions of the roll. Therefore, if a player advances good arguments (I don't ask for big speeches, but I ask for ideas) he'll have a positive modifier and if he is clumsy and put his foot in his mouth a negative one (As the player who told the guard : "Oh, no, we didn't see anything when this guys was jumped upon by SIX attackers in that dark alley other there" or "How could we be the ones to rob him, we don't even know that he inhabits the left tower"... and yes, I 've seen such example of fumbles).
But, who cares, I've read enough from you to understand something, I wouldn't play on your table for anything. The picture you are giving of yourself is by amongst the worst DM I've seen (and I've seen some who started to count vertical reach from the floor and not from the head).
Anyway, have your fun with whatever you wanna call your game but be respectfull and Blame DnD for your mistakes.
Oh, and BTW charm person a) need to be cast... and I wouldn't tolerate anyone casting in the throne room, guards are here to see to that. and b) have a finite duration and after that, the recipient WILL be resentfull.... I wouldn't even comment on the PC superioty over NPC...