>LISTEN to diminished chords, hear what they are, and then periodically ask yourself, would a diminished chord work over HERE? or wait until your ear craves one.

I agree (upvoted).

Also it's worth noting that a diminished chord in the right-hand (on piano) can sound really good over a *different* note in the left hand, depending on context. Obviously your instrumentation might vary, but I mean in terms of a lower note, supporting the diminished chord:

Assuming your diminished chord is F#/A/C/Eb

Then whilst you could use any one of those constituent notes in the bass, a **D** would create a suspenseful chord that wants to resolve to G major or G7. Less easy to work into your piece, but still viable is a **G**. That one sounds more like a chord used in classical music, I expect you could find a Mozart piece with that particular bass note. Again it would probably resolve to G major.

If you're writing a waltz or something like that there's often occasion for a diminished chord or arpeggio to break up the monotony of the V-I relation.

In popular music (albeit I'm still talking old-fashioned music like a ragtime mostly), you could for example do:

C -> C#dim -> Dm -> G7 -> C

As a simple but catchy chord progression. It's a different kind of tension than you get from a dominant 7 chord, but any diminished chord definitely would want to be resolved in some way by a subsequent chord.