You don't even need a diamond pickaxe to get obsidian... but whatevsTwo things I've noticed so far:
It's possible to bypass the steel pickaxe stage. Bronze pickaxe can mine diamonds, make a vanilla diamond pickaxe, mine obsidian, make Alumite. You may want to tweak the vanilla minecraft diamond pick to only hit up to redstone if that's not intended.
Upgrading WAILA to Waila-1.5.7a_1.7.10 fixed a lot of the lag I was seeing when having an NEI search open. I'm not sure how many other people have that lag but if you do, give it a try.