There really should be a Sticky on the Diverter vs 3rd function debate. LOL
In a nut shell (and somewhat over simplified):
A Diverter is a On/Off device that simply selects which one of two paths fluid will take but does not control the actual flow of fluid itself. Flow control comes from the valve on the function (circuit) you are "diverting" (typically curl/dump function) to a new function. This will allow you to feather control of what ever you're controlling since it uses an existing proportional valve but you can only control one or the other at a time.
A diverter set-up will also cost less as it's mechanically simpler & requires fewer (and normally shorter) hoses.
A "3rd function" utilizes a separate solenoid operated valve to control fluid flow & direction. As such it is either Open or Closed (all or nothing) in either direction. Generally speaking it's plumbed in after the main loader valve via the "power beyond" line.
In principal - a 3rd function will allow you to operate all three functions at once because it's controlled by it's own valve. In reality most SCUT/CUT tractor hydraulic systems do not have the fluid flow to make this happen.
To see for yourself try lifting & dumping your loader at the same time. If you pull the stick all the way in both directions, it lifts and stops dumping - that's because the first function (Lift/Lower) is using all the available fluid flow and none is left for the curl/dump function. Now if you feather the stick into both functions then both actions happen together but both at a lower speed. That's because two functions are now sharing the fluid flow. You are restricting the first function (lift/lower) by only partially opening the valve so the "left over" flow is now used by the second function (curl/dump).
Unless you are very very delicate with the controls there will almost never be enough / any flow leftover to operate the third function and if it is, it would be earth shatteringly slow.
Also a 3rd function is more expensive mainly due to requiring more / longer hoses.
So at this point it's about whether or not you really NEED the ability to feather your 3rd function, the cost you're willing to pay, and which method seems most intuitive to you to use.
For me it sounded odd in my head trying to work the diverter set-up, others do this all the time and have no problems, and there are even some who have put the diverter on the lift/lower function so they could open/close and curl/dump easier. It all boils down to what works for you because once you're used to it, it's second nature.
All of that being said - MIE is in the process of developing what they claim will be a true proportional 3rd function valve kit. See this thread for more general info on Diverter vs 3rd function as well as more info on MIE's new offering.
http://www.tractorbynet.com/forums/kioti-owning-operating/384106-mie-3rd-function-kit.html
Another option is to assemble your own 3rd function "kit" - several folks have done this as well. I have a write-up on the one I did for our CK series over in the Build it yourself forum.
http://www.tractorbynet.com/forums/customization/358086-kioti-ck-35-3rd-function.html
Photobucket stopped remote hosting and my thread lost all the pictures so I made an updated write-up as a downloadable PDF at the end of the thread.