I see a lot of the up down up down up down pathways on islands, and I feel diagonal buttons would help out a bit with that and make exploring less click happy.

Diagonal movement has been suggested before.

I'm 90% sure it wont ever be added to the game since it would be map-breaking, E.G., where you could diagonal-walk to reach treasure chests without fighting the guardians.

See, that can be avoided by making it so that you can only diagonally walk around things that you can see, and where there's an open space in both spots on the map that you'd be moving through.