Why is turning cremated remains into a diamond wrong?
The short answer
The Church permits cremation but insists the remains be treated with respect: not scattered, but committed to the earth or sea in a suitable container or placed in a mausoleum.
The Church allows cremation (CCC 2301), but it is very concerned that the remains be treated with fitting respect (Congregation for Divine Worship, Indult on Cremation, 1997).
The cremated remains should not be scattered. They are to be disposed of with dignity, either committed to the earth or sea in a suitable container or placed in a mausoleum (Order of Christian Funerals 416).