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I'm pretty sure that if Blizzard wants Diablo in Diablo III (which they should if they know what they are doing), then Diablo will be in Diablo III. There is any number of ways they could allow Big Red to make his way into the game. It just wouldn't be Diablo without him.
As they say, Diablo cannot be killed....but his Mortal Form can be Slain, only to be trapped in a Soulstone, some of the Fragments may have been shattered, but after some time they might even return back (powerful enough to infest the mind of a wanderer). So if Diablo dies again, Blizzard can either make another Diablo with new companions or some copy of himself made by some "Superior Race"...
This is probably the single, largest reason why I believe D3 (if D3 even happens) will most like be a prequel of some sort or have a much broader scope, like a MMO with the forces of heaven vs the forces of hell and all that jazz. Because, really now, are we going to have to kill Diablo for a third time? I don't want to see him turned into Dr. Robotnik.
You know what would be epic for D3's finale ?
Diablo, Meph and Baal merged into one ultimate demon.
Maybe Diablo's former body fused with his brothers' soulstones ?
This way, calling the game "Diablo" would still make sense.
I think a 3 on 1 battle could be very interesting. You'd have to have some sort of coordination in a group.
Two of the D2 act bosses have various monsters around them, but the only places in D2 where you fight multiple really tough opponents at once is uber tristram and the ancients.