Nice grinder.
Agree an angle held diamond has to be turned to a fresh facet to dress well. But if dressing flat and then grinding with the flat end of the cup wheel you may have too much of the wheel in the cut. With the stick you likely get a little dish and so have less wheel in the cut consequently you get a better finish. Still the block is course so a better dish wheel can be made with a Norbide stick or a roller wheel dresser like the Mini Crackerjack.
Desmond - Grinding Wheel Dressers - Crackerjack Dressers. With the mini you hold the dresser wheel at an angle to the wheel so it only gets up to about 500 rpm (You can also hold your thumb on the wheel to break speed.
Looks like your wheel arbor is very long so with a shorter arbor you will get a better grind.
The cup wheel grinds better if the OD is dresses just a little to get a better balance.
You might diamond dress the end of the cup wheel flat and then grind the end recess to just leave 1/16 wide in the cut and the rest of the wheel face relieved to to have less wheel in the cut.
The best grinding will be achieved with a straight wheel and then turning the wheel head at flat or at angle so you can use the OD of the wheel. Yes it will then act like a surface grinder and grinding wet would be best. Yes for the grinding shown you may have to turn the wheel-head at 45* and then dress the wheel at flat so the straight wheel would end up with a 45* to grind flat.
Good to make a box slide dresser. 3 x 4” rectangle.. Grind a ½ x1” slot to the 4”. Make a 3x4 x ½ cover plate and drill and tap 4 10/32 cap screws to join. Now make a diamond slide bar 7” long and make fit to the slot with .001 all around for slide, Having a hole for the diamond shank and a set screw to hold… and a hole at other end for a small handle. Yes you just C clamp it to an angle plate or to anything at the set angle and dress.
With that you can quickly mount the slide dresser to and angle or flat and dress the wheel.
Good to make up some angles for better wheel angle set.. perhaps 1/4 x 6" triangle at the standard angles so you can set (check)the wheel to be correct angle.