Yes agreed, the the blade would not likely get hot with that much water and once it got through one side it would have plenty of lubricant.
I suppose if the Diamonds were placed in such away as to prevent them from packing material in between it would work. All the Diamond wheels I have worked with were for tool grinding and would not lend it's self to that application.
The wire cutters not being a ridged construction are self cleaning.
Do not know the wall thickness of the pipe but that might have had some influence on the reason for a Diamond wheel. Plus I belive I heard the pipe was around 20" OD. That would take a pretty good sized blade to slice straight through (if thats how they did it). The SFM at the OD of the Blade could get to be a big number at a realitively low RPM.