Now is the V° the most common place to use your dominate?
The most common, but not the only one. You seem to know your numbers, so I'll try and put it this way -
a lot of movements can be reconduced to a ii-V-I, and the V can almost always be a dominant.
For example,
- v-I-IV ("..I once was lost...") can be thought of as a ii-V-I, just moved down 3.5 tones. You can play Gmin7-Cdom7-F
- vii-III-vi ("..never would've made it..") can be thought of as a ii-V-i (note the minor "i"), just moved down 1.5 tones. You can play Bmin7b5-Edom7-Amin.
.
Is vii the most common place to use your diminished?
vii is usually half-diminished (Bmin7b5, B-D-F-A).
Every time you move up a tone (from I to ii, from IV to V, from V to vi) you can use diminished chords.
You can also use a dim chord half a step below where you want to get to.
See the progression below (I don't have a keyboard now, so it might be off).
The new chords are a bit over the top, but I hope this is helpful
Key of F
A#, A, G, F, D
FM9 - played - F / G A C E
F#dim - F# / F# A C D# (I to ii)
Gm9 - played - G / A Bb D F
Fdom7 - F / C D# F AA#M7 - played - A# / A# D F A
G#dim - G# / G# B D F (half a step below the Amin)
Am7 - played - A / A C E G
FM - played - F / A C F