We didn't put Diem in power; Bao Dai gave him a position of only nominal influence to placate the anti communist nationalists, and he used it to mobilize support and crush the opposition, destroying the Hao Hoa and Cao Dai sects, then the Binh Xuyen crime syndicate under French influence, then oust Bao Dai and turn Vietnam into an independent republic. Moreover, the religious flag laws developed in response to Catholic unruliness. When they enforced the law on the Buddhist population, the mostly Buddhist generals who later overthrew Diem supported the government's measures to clamp down on the resulting unrest, and really wanted him to take even harsher measures. What happened was that they mistook the editorializations of the New York Times supporters for the official opinion of the US government, and feared the US would withdraw support for the war if they didn't get rid of Diem. Even then, there was no approval from the US until a bureaucratic end run by mid level State Dept officials essentially tricked the president and coerced the cabinet into green lighting it. RVN was holding its own, and even making considerable progress with the Strategic Hamlets until the Buddhist crisis and coup; things only really went bad in the chaos of constant changes in government, followed by American irresolution with the tepid bombing campaign of 1964, convinced them the war could be won if pursued in earnest.
I early 1951 Diem approached the America State Department to try to persuade US military intervention into Vietnam (under his leadership). Dean Acheson (Truman) thought him "too Catholic, too ridged, and too 'monkish'" to be an effective leader. Earlier on Diem had once held the position as Minister of Interior under French rule but resigned the post; he then refused multiple time to be part of any government lead by Bo Dai and eventually fled the country.
By 1954 and the Geneva Accords, Diem Diem was in self imposed exile in Lakewood New Jersey; William Donovan, Intelligence Chief during WWII, along with Cardinal Spellman and Senator Mansfield championed Diem to the Eisenhower administration.
With prominent Catholics lobbying for his appointment Bo Dai had no choice but to go through Diem in his request for American assistance. The Eisenhower administration then tied Diem to American support and Bo Dai had no choice but to accept Diem as Prime Minister.
The Dulles brothers (John Foster [SS] and Allan [CIA]) than began their 'nation building' (and extended their pactomania) through Diem and began to squeeze the last of French rule out of SVN.
The new government formed under Diem was made the de facto government of SVN when Dulles directed ALL American military and financial aid through Diem's government only. The French left the region.
In 1955, after announcing American intentions to forgo the proscribed unification election, Dulles then orchestrated a national election between Diem and Bo Dai. Diem carried 98.2 percent of the vote wining more than 605,000 votes from the 405,000 registered voters in Saigon. (I didn't miss type.)
Diem was an American creation (John Foster Dulles's creation); it was not without its critics.
But either way Diem is 100% ours!