If you think of it as "hard work wasted," you'll only cause yourself (and probably your son) unnecessary stress. It's great that he took some initiative and gave it a good try. It also sounds like you were behind the experiment more than he was. I'm guessing he's just not ready yet, particularly with the diarrhea problem that's so hard for him to make physical sense of.
I'd put him back in diapers. Keep talking about the benefits of potty training, and tell him you are confident that when he's ready, he'll be able to do it. Ask him (or have one of his toys ask him) to tell you what he's feeling when you notice he's doing something in his diaper, so that he'll gradually learn to recognize the signals.
I've known quite a few kids who were allowed to go back to diapers after an early try at training. And quite a few who were allowed to use diapers for pooping until they figured that out – it did NOT confuse them; it put more control in their reach, which is the whole point of potty training, if you think about it.
Some kids don't successfully train until after four, so he's still got plenty of time for his body and nervous system to mature. Kids do want to train when they are ready, and when your little guy gets all his ducks in a row, it will probably happen pretty quickly – and for keeps. Every child I've known who has waited until he/she wanted to be trained pretty much trained themselves in anywhere from immediately to two weeks, with few accidents every day. It's as natural a developmental step as walking and talking, and as desirable to the child.