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I played Michael Keller's list for a small FNM. Went 2-1, but most of the games felt very winnable.

Round 1, lost 1-2 to Miracles. Game 1 I get stuck on lands at some point, I think I mulled to...

Well, you can remove Karn in response to the Lattice being played. That's really not much different than floating mana to Abrade the Lattice once it's in play, just 1 mana more expensive. But also...

Turns off Mox Diamonds?

That is correct, a spell only fails to resolve if all it's legal targets are now illegal. Otherwise, the spell does as much as it can.