In the past, one of the practical advantages of the term "public diplomacy," for an overseas USIA (United States Information Agency) practitioner of the craft serving the USG (as I was privileged to be for over twenty years, mostly in rather stressful but not uncomfortable conditions as a US diplomat in Eastern Europe during the past century), was that -- thanks to its vagueness -- "public diplomacy" allowed said practitioner "in the field" to do what she/he thought was important, without micromanaging directions from Washington, within the broad framework of US foreign policy.
While an enthusiast of the latest social networking media on the Internet, I should note that the absence of "instant communications" had much to do with the independence PD officers enjoyed in their often far-off postings. Simply put, Washington was not on your back every minute with e-mails, cell phone calls, etc. You were your own person and essentially could "play the PD diplomat" as you wanted -- within broad guidelines.
Meanwhile, the most astute persons heading geographical area bureaus at USIA realized that the "Agency," as it was known among its employees, had not hired automatons, but thinking, living, independent human beings who could make crucial decisions in local situations on behalf of the national interest of the United States.
I suppose that such respect and trust for in-the-trenches employees explain why so many "PD diplomats" are still so "loyal" to the "old" USIA (at its best; at its worst, which was all too often evident, it had its own slow-moving bureaucracy and ideological warriors).
I won't certainly go as far as using the simplistic phrase, "Why We Won the Cold War," although I always felt, in my postings overseas, that what made US PD diplomats "different" from their communist (and non-communist) "adversaries/competitors" was that we USIA-ers could do "our own thing" without the "do-this, do-that" instructions of formal Foreign Ministry bureaucracies. Also, it helped that non-USIA employees in the State Department and other agencies serving at a foreign post had little or no idea what "public diplomacy" was, giving USIA-ers much leeway to do what they wanted without interference from other Embassy sections.
Nothing worse than nostalgia, of course. "Useless," as it was known among some State Department employees (a dismissive pun on USIA's overseas name of USIS, United States Information Service), is clearly a thing of the past -- like the Committee on Public Information (1917-1919), the Office of War Information (1942-1945) -- "information" agencies which too were created in periods of "total" global war.
With a new administration, the concept of a global war -- against terrorism, initiated by the Bush White House using false analogies with WWI, WWII, and perhaps even the Cold War -- seems to be, mercifully, passé.
That's all for the good (terrorism is a technique, not an enemy, as persons far wiser than I have pointed out), but ironically this dismissal of the hapless GWOT terminology does not bode well -- bureaucratically or "funding-wise" -- for a strong PD presence at the State Department or for an "independent" so-called "anti-propaganda" PD agency, as former Secretary of State Albright characterized the USIA when it was consolidated into the State Department in 1999.
I'm a great believer in educational/cultural exchanges and in what I call, for lack of a better term, "arts diplomacy." Bravo to all our fellow citizens that engage in people-to-people diplomacy (I do, however, recall a wonderful passage in Kenneth Osgood's book about propaganda during the Eisenhower administration, when a US P2P group involved in canine matters with overseas interlocutors concluded that dogs were the best ambassadors).
But I'm also a realist, and what keeps US propaganda going -- sorry, I meant "public diplomacy" -- is war (especially a global one). No war, no or little USG-PD (or substantial funding for it). Such is the lesson, regrettably, of history, if it is any guide.