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I don't know why pysvn in 1.7.5 version, takes dirname instead of path (it is documented otherwise: http://pysvn.tigris.org/docs/pysvn_prog_ref.html#pysvn_client_diff).
.../pysvn-1.7.5/Source/pysvn_svnenv.hpp has #define PYSVN_HAS_IO_OPEN_UNIQUE_FILE2
and then it uses to create a path to filename
svn_error_t *error = svn_io_open_unique_file2 (&m_apr_file, &m_filename, tmp_dir.c_str(), ".tmp", svn_io_file_del_none, m_pool);
in .../pysvn-1.7.5/Source/pysvn_client_cmd_diff.cpp
I am not sure, whether is a new version bug/feature or you have configured and compiled pysvn with some custom flags (I did not).
This solution may be vulnerable to race condition, however I haven't tested it.