I would not permanently mount any item that I could not replace.
Clear film encapsulation may be OK, but it would change the look of the document, and you would need to keep the tape strips of double-sided tape (NOT ATG) within 1/4" of the edges.
Hinging may be OK too, if the substrate is sturdy enough to withstand the stresses of handling and gravity, but I would be skeptical about that. With one strong bump of the frame, hinging could result in more torn pieces along the top edge.
Unless the diploma has sticky parts or three-dimensional features, such as a raised seal or thermal engraving, I would probably use an acrylic DCO (Direct Contact Overlay) mount. The main concern would be mechanical damage caused by pressing the document against the acrylic sheet.
That would be a non-adhesive mount, and the entire surface area would be supported evenly -- no stress on any part of the document. You may show all the edges if you want, and it is completely reversible, too. I suggest optically coated acrylic for the best possible appearance. Do not use glass for this type of mount, because of dew point issues.
More details are available in previous Grumble threads -- search for terms like "overlay mount". Also, see the article in June PFM.