I might be wrong, but if I recall correctly, Lynch/Frost weren't happy that other writers came up with her story line. Lynch had no choice but to keep her in the S2 finale, though. So maybe they just wanted to forget about her. But in terms of the story, the "real" Coop didn't have a whole lot of time to catch up on everything.

It would have been easy to just mention her as a casualty when the deputies were reviewing the Laura Palmer murder for instance. It would have finished her story without taking any time.

I think Diane from Season 3 would make more sense as Annie and that is essentially the role she fills.  Annie being a doppelganger when she comes out, maybe occupied by Caroline,  makes more sense then the contrived way Diane ended up being a doppelganger. I don't think Diane was ever supposed to be significant but after she became so to fans Lynch used her instead of Annie, a character he didn't create,  which also allowed him to cast Laura Dern in a significant part  since no one had played Annie at that point.

I was just replying in another thread (on Sheriff Truman), and it's suddenly struck me as very odd that we are constantly reminded of Harry Truman and many people are concerned about him, but at the same time, no one even mentions Annie, not even Norma.

Sure, Harry played a much more prominent role in the town, but still.