The most disbelieving thing that can be easily fixed with diminishing returns is that the game currently incentivises endlessly switching between mega-projects: as much labs as it's possible to finish the most urgent project, then "flood" the next urgent one, and so on. It's hard, though, to feel this like a story. Home rules to save the story-telling are quite tedious to implement, because there are several factors (like retiring/dying senior researchers, for example) that are changing the sequences abruptly and it's just hard to track things on without making additional programmed tools.
The Limited Research Administration option made it a bit better, yet it's actually just a half-way stop.
I think the best possible mechanics (and still very simple) in this regard would be just to make every project having diminishing returns from the very start, regardless of if there's labs flooding or fundings flooding.
This will incentivise dividing labs between as much useful parallel projects as it's possible, barring real urgency, and then leave these projects to their natural paces - with both the best sence of historical process and the less micromanagement needed.
If I understand correctly, the suggestion by "diminishing returns" is that the more labs a project uses the fewer RPs each lab contributes to the project?
If so, I am not in favor of this idea. On one hand, I don't think this actually reflects how large scientific collaborations work at all, so I don't think there is a realism aspect to this. On the other hand, this creates an optimal gameplay path of using only very few labs per project and I don't think this is good for gameplay; forcing a single strategy to be optimal does not create interesting decisions for the player.
A better solution would be to have some amount of time when a new project starts or is resumed during which research efficiency ramps up to 100%. However, this would be complicated to implement and I don't think it is a problem as it currently is (not compared to the same situation for factories, at least). It is easy enough to fluff the first part of the RPs required as the early theoretical work, preliminary studies, etc. leading to the latter part of the RPs which represent the high-impact stuff that headlines a dozen publications in top journals, etc. I don't think we need a complicated model of research to represent what amounts to a different view of the process.
In my games I don't think of the RP numbers as research production, rather as funding allocated to projects by government grant agencies which happens to return the desired results after 5k or 10k or however much investment. It is not a complete, perfect reflection of the game mechanics but I think it works well enough.