Jack "Legs" Diamond is not a bad episode but it has a few things wrong with it. For one I thought Steven Hill was miscast as Diamond. The character looks and acts more like an arrogant fraternity boy than a notorious gangster. Fortunately, Hill would redeem himself with a marvelous performance in Season Three's Downfall. The second thing wrong with this episode was the fact that they brought back Lawrence Dobkin as Dutch Schultz and gave him nothing but a cameo. That's like having Barry Sanders in your backfield and using him to block.
As for the pluses you have Norma Crane who gave her best performance out of three appearances as the alcoholic and slatternly Alice Diamond. Crane was a theatrical and over the top actress but for this particular character being over the top works. Peter Whitney, as Big Bill Swinney, also gives a good performance as does Suzanne Storrs as Diamond's mistress, Dawn Dolan.