I doubt it's diffraction limitation so much as your eyes not being able to see the grain as clearly. I'm not convinced the human eye is equipped to clearly see that. And it may SEEM as though you're getting a focus shift... but I'd be willing to bet that as you stop down and your DOF increases, the point of optimal focus becomes less and less clear. Especially considering the loss of sensitivity to the eye.
But if you DO decide to dump the lens... well... I could really USE a paperweight...!!! I'd be happy to cover your shipping...!!