I'd guess not as I'd be using IC2 power for it, but doesn't Diamond also increase the mining power by two levels, or is it TO level 2 if it's below?
It only increases it TO level 2 if it's below. Basically, adding a diamond to a pick brings it to the mining level of a diamond pick if it wasn't already. So, you can't make a cobalt/ardite mining pick by adding a diamond.
That's good. A villager breeding system was what I had in mind, I just wanted to start the process.
Also, I've not messed with villages before, so will two villagers breeding create a villager of a random caste, or of a caste based on the parents? In other words, if I start with two farmer (brown) villagers, will I get the mod villagers eventually, or will I only get more farmers?
It'll be a random caste.