those knives were mass produced. i doubt at that time they had very accurate ovens/tempering equipment, add in the rate at which those blade had to be produced and variations in the hardness of the steel must have been common. that knife was probably made out of a slightly modified high carbon steel, example: like 1095 cro-van (although i'm not 100% certain). 1095 can be hardened to about 65HRC and if the tempering ovens and or process was rushed or not even, that could make for varying hardness throughout the blade. that would explain why the blade is wearing faster in certain spots. also that is a fairly large blade with a thick grind. add in the idea that it might not have been tempered down right, and that would cause your trouble sharpening it. it would be like reshaping a file by hand.
besides the fact that diamonds will dissolve in steel way below steel's melting point, the fact that those knives where mass produced for the military should be the first red flag as why they wouldn't have diamond dust in the steel. only natural diamonds were available at the time and it wouldn't be feasible or cost effective for the company to even try that when they had to make thousands of them.
i found the paperwork that would come with one of those PAL made knives:
Cro-van or Nickle-van is a common guess as to comp. It's my guess as well.
It could have been just marketing for all I know. That's a possibility.
As far as the paper is concerned, well it's a Pal cutlery users manual alright, question is, what knife did it come from?
If it came with the knife in question you might have something, otherwise a manual from a Gerber pocket knife or a toaster oven for that matter would prove just as much, which is zero
Military knives of that time were almost exclusively 1095, not alloy. Blackened blades with steel pommels, not aluminum. Look at any legit WW2 model and you see that pattern. It's doubtfull they would have used Aluminum for the pommel since the Gov was calling for aluminum to used in aircraft. People were even donating aluminum cookware for that purpose. All part of the war effort of the forties. I could be wrong about a knife like that never being WW2 Gov issue, but I doubt it.