The fact that the steel is ignored is my real problem with them. Sure, it doesn’t need much diamond ( and low quality at that ), but the steel is completely ignored ( you don’t even get steel scraps back when they break, just a single diamond scrap ). I think if you are starting with a steel pickaxe, adding gems shouldn’t result in one with less durability than the original steel pickaxe. Not being upgraded to the full diamond durability is fine, it just shouldn’t lose the durability from the steel ( and preferably give back some steel scraps ).
Even though it isn’t much diamond, and “low quality”, you still end up with a pick that is on par with one simply made of cobalt, and that’s usually something I have tons of without much other use. Even flawed diamonds are still quite rare, and the steel I rate as more valuable than cobalt, so I expect a pick that lasts longer than cobalt, even if it isn’t any more than just steel.
As it stands, diamond imbued picks barely last longer than infinitely disposable granite picks. Sure, they mine faster, but given how quickly they wear out, and how few of them you can produce, you may as well just stick with granite picks. Or vanadium steel. Or cobalt.