Status based on time of booking, or check-in date?
 

I will be reaching diamond status prior to my stay in March. However, when I booked the rooms, I was platinum. Does anyone know if the hotels already assign rooms based on status at booking, or would I need to let them know that I recently made diamond when I check-in to get my club upgrade?

It won't hurt to mention it at check-in but rest assured that no hotel will preassign rooms a month in advance. The only time that I would make sure to call in advance would be if the hotel is sold out - otherwise you can sort out your upgrade/club access at check-in.

Thanks for the info! I'm staying on reward nights, so I'm hoping that FFN stays are also eligible for the Diamond upgrade.

Yes they are - any stay including award stays is eligible for diamond benefits. You may want to read some of the stickies on top of Hyatt forum and learn more about the program as there is lot to learn and even more to enjoy :).

if the rate has not increased, and if it is not an advance purchase rate and it can be canceled with no penalty I would book the room again, and then cancel the existing reservation.

Or ask Hyatt to resend your booking confirmation (after you make Diamond status). On the booking confirmation it will have your name followed with your status (Platinum or Diamond). If it says Diamond you should be fine. If it says Platinum, just let the hotel know when you check-in because the hotel might not know that you are a Diamond.