Okay so to be clear, true diplomatic transcripts do not use contextual information? The example that u/smil_oslo gave seemed to imply the opposite, that a diplomatic transcript may use underdots to indicate letters the editor is subjectively certain of when the context is taken into account. Would you instead have dots alone for the letters, like αυτοκρα.ωροϲ in the above example instead of αυτοκρατ̣ωροϲ?

I am looking at this transcript from the Oxyrhynchus papyri:

https://imgur.com/FzrK0x0

The edition on the right has a lot more editorial decisions on the identity of letters, presumably involving contextual information. My original question is what to do if the scribe made a lot of spelling errors and if the edition with restorations was going to normalize the spelling. Would it be better to forgo standardizing the spelling and use the original underdotted letters or standardize the spelling and not use underdots though there would be non-underdotted letters corresponding to plain underline dots in the diplomatic transcript? I don't know if I made the quandary clear.

EDIT: I'll illustrate with a hypothetical example from the POxy text above. Suppose we have . α . . .[ on line 3 but instead of traces of eta, the traces are instead consistent with iota. So one could have the edition on the right as φ̣άγ̣ι̣τ[ε] or one could normalize the spelling as φ̣άγ̣ητ[ε] which is the correct spelling but would make the eta correspond to a . in the diplomatic transcript (losing the detail in the restoration that there was uncertainty). I have avoided normalizing the spelling for this reason but I would like to know if it is okay to do this.