Diigo holds promise for use in schools, just plan on spending some time working with it before bringing it to your students.
I can see using Diigo in my classroom, especially for my advanced journalism students. I often assign my students to read an article and complete a worksheet or graphic organizer to break down the material and focus their thoughts around the article. This is something I always ask students to do on paper, but Diigo has the potential to change this practice. I don't mean to say that I'm going to go completely paperless, but it does hold some promise. Students would read three or four articles online and annotate the text with a highlighter, add commentary with sticky notes and utilize other commenting tools to ask questions. Then, as a group, we can all read everyone's material and make our own comments on the articles as well. This could focus students to read a number of articles online, while allowing the instructor the ability to check in on their progress and spark discussion in class. I will certainly start using this with my more advanced students, but for those hoping to jump right into Diigo right away with their students (especially the younger grades), I recommend that you proceed with caution. There is a serious learning curve to Diigo.
I spent quite a bit of time with Diigo and did a bit of research online, but found some of the tools a little hard to get used to. First, I spent a bit of time bookmarking some sites and found that the tagging feature was a bit limited. I spent some time trying to add more, but hope that the more I use this feature, the more bookmarks become available to me. Second, I found that when I made a mistake highlighting (ie- highlighting too much), I could not "undo" my marks. Maybe it will take more time with the tool to get it just right, but I would like to find a way to undo my marks. Third, I find the constant Diigo toolbar a bit cumbersome on my browser and wish that I could minimize it or simply toggle the Diigo functions on and off from time to time.
One thing I would recommend to teachers is to simply start a Diigo group with a handful of colleagues and start practicing with this Web 2.0 tool immediately. This will only help advance your internet research and annotation skills, but it will help build a body of work to model with your students. For some resources on how to use this tool, check out the Diigo Help Center or this great site with all sorts of links to Diigo tutorials