We probably first need to understand what that setting does, there is a difference between diffuse mat and diffuse light and I've seen descriptions that suggest either. The other thing, is the bounce count absolute or relative to the overall count, ie do the spec/trans bounces remain the same or are they boosted to keep the number of samples constant. Not surprised the fireflies increase as diffuse mats tend to flatten the light response. Did you look at the log to see what impact the changes had on the ray count?