Yes you could certainly use a diminished chord to approach the C-7.
Regarding the Edim7 chord approaching F-7:
The Edim7 chord can also be seen as a
rootless C7b9 chord
If you take the notes of Edim7, we have E-G-Bb-Db, and if we add a C in the bass, we then have C7b9.
This is true for all diminished chords, and often they are functioning as dominant chords in disguise.
So the Edim7 to F-7 could be seen as a C7b9 to F-7 which is simply a V7 - i-7 resolution.
Coming back to your question:
For the final chord in the tune, Matt shows a number of different tensions that can be played over the G7 chord taking us back to C-7 at the top of the form.
He does actually use a diminished chord at 7:07 in the tutorial:
He calls it a rootless G7b9, which as we just identified above, is also a diminished chord.
It looks like a Ddim7 chord. However, it’s also important to understand that diminished chords are symmetrical in the sense that when we invert the voicing, we have the same interval combination.
So Ddim7 is also Fdim7, Abdim7, and Bdim7.
Furthermore, each one of those diminished chords can function as G7b9, Bb7b9, Db7b9, and E7b9.
That’s quite a lot to take in, but check out this lesson for more information:
Diminished theory is a fascinating subject, our course on diminished chords contains lots of great application examples.
We also have a thread on Diminished Scale Theory that you might find interesting:
Hi Hayden, in the handout titled Diminished Scale Patterns, what is the basis of the Diminished Scale ? I am curious about the accidentals. Sorry for what may seem like a simplistic question.