For anyone following this line of thought on Diandongosuchus, I offer data from my matrix. The following synapomorphies were recovered with Diandongosuchus and phytosaurs (I make no claim that these traits are not found elsewhere as convergences within the tree):
1. Naris not larger than antorbital fenestra
2. Squamosal creates a temporal ledge
3. Squamosal descends at a right angle
4. Postorbital/parietal contact is long
5. Postfrontal present (plesiomorphic)
6. Postfrontal has no contact with upper temporal fenestra
7. Quadrate lean: vertical
8. Mandible tip rises
9. Angular lateral exposure: less than a third of jaw depth
10. Mandible ventral shape: straight
11. Cervical centra: height = length
12. Cervical ribs with free anterior processes
13. Scapulocoracoid fenestration present
14. Radius + ulna not longer than 3x width
15. Tarsus has double bend shape
16. Pedal 3.1 > p2.1
17. Pedal 4 length subequal to metatarsal 4
With phytosaurs and Proterochampsa:
1. Ventral aspect of premaxilla vs. rostrum: a third or greater.
2. Squamosal and quadratojugal indentation: V-shaped
3. Choana orientation: deflected medially (unknown in Diandongosuchus)
4. Vomer teeth absent (unknown in Diandongosuchus)

Figure 1. The real sister taxa and close relatives of Diandongosuchus beginning with the Youngina with the longest, lowest rostrum, BPI 2871, and moving forward toward the parasuchians.
Of course lots more characters were recovered in larger clades surrounding the phytosaurs. If anyone disputes these or has others, please bring them to my attention.
As always, I encourage readers to see specimens, make observations and come to your own conclusions. Test. Test. And test again.
Evidence and support in the form of nexus, pdf and jpeg files will be sent to all who request additional data.
Reference
Li C, Wu X-C, Zhao L-J, Sato T and Wang LT 2012. A new archosaur (Diapsida, Archosauriformes) from the marine Triassic of China, Journal of Vertebrate Paleontology, 32:5, 1064-1081.
I assume you have read Bill Parker’s thoughts on this?
http://chinleana.fieldofscience.com/2012/08/diandongosuchus-new-archosaur-from.html
Had not seen it. Thank you, Rob, for the link. Nice to know someone else also doubts the published phylogenetic position.
No prob. Curious to see what comes of it. Hopefully we won’t have to wait long.