Trying to understand connotation/semantics way of thinking

Couldn’t understand this one at all. How did we come to “Diluted”?
My way of thinking: (pls correct me if wrong)

1st step: “By” conveys support so read the sentence next to it “his wholehearted…assumption” sounds positive so the sentence before it needs to mean positive as well.
2nd step: Figure how to make the blank sentence positive and in support to the 2nd part
3rd step: How will his attacks by cancelled in a way that he wholeheartedly accepts? By fitting in a way that makes the sentence positive. - word guesses: Canceled or smthng like that… not sure why dilute?
4th step: Unfortunately is a contrast word (eg: He studied really hard, unfortunately, he failed the exam), in this case how is unfortunately helping us reach the answer?

Pls help figure the process and way of thinking for this.

Your word “cancelled” works. The logic to get there is sound.

And your example of what Unfortunately represents also works here

Diluted is just a semantic guess based off of the logic in the sentence

Your guess doesn’t need to be the same

Any word word that represents undoing or watering down the work that was previously done is fine

Got it. But what should the thinking process be?
If I want to start figuring this out through the word “Unfortunately”, how should I go about it?

Example: Unfortunately (-ve), so the 1st idea after that needs to be negative? and hence the black is negative?

can you pls explain this.