I believe it does! Becoming a Diplomat develops your speech skills to the point of being able to speak to everyone. Diplomats are unable to speak in any other primary or race language, except the Universal language.
To illustrate my point: If you, Sinrek, the Diplomat rogue troll, try talking to me, the Diplomat druid night elf, in your native language - I believe, Zandali, I would understand every word you say. This would be the case, even if you communicate in Zandali, with let's say a druid tauren, that's not a Diplomat. The reason being is that your words will automatically be translated in Universal language, as you are a Diplomat yourself.
Correct me if I'm wrong, but in summary - Diplomats speak only in the Universal language, while non-Diplomats can choose what language they can speak in.
In conclusion, all of the language choices now go as follows:
Common for Humans;
Common and Darnassian for Night Elves;
Common and Dwarven for Dwarves;
Common and Gnomish for Gnomes;
Orcish for Orcs;
Orcish and Zandali for Trolls;
Orcish and Taur-ahe for Tauren;
Orcish and Gutterspeak for the Forsaken;
Universal for Human, Darnassian, Dwarven, Gnomish, Orc, Troll, Tauren and Forsaken Diplomats.
Slowly turtling my way up.
