Someone commented on the CF page that in version 1.6.2 you can break diamond ore by using a stone hammer.

I found what the problem is. On the HammerItem class. The overridden method (isEffectiveOn) for checking whether the item is effective on the block material, is always returning the Diamond Pickaxe item to check for it. Removing that method fixes the problem since everytime the method is called, it calls super and appropriately handles the effective level of the hammer.