Hardness is defined by the ability to scratch other substances or be scratched by them. So yes, diamond can scratch anything but not be scratched itself by anything else. It is, however very brittle. How else could they cut it?
I think emerald could be used for some things. Not tool-related (directly) at any rate; maybe use it to make some more advanced redstone circuitry, or hell even as a crystal in a laser or something (because dammit I want to be able to lase creepers).