Better leave the car example out. Kits are easy to tell if you know what a real one looks like and they have zero effect on the value of real cars, as the rarity of real ones is the same. My 5k car has no effect on the 52 million dollar real one.
As someone who has never really researched this stuff, I don't see how fake diamonds could be a bad thing. I have heard about the monopoly and have heard about the conditions 3rd world countries are put in over diamonds. Is the only argument against it, "it makes the real one less desirable"? It kind of sounds like captive born vs wild caught to me.