I think the diplomatic range thing is to prevent alliances across Europe before technology made them more feasible. There should be a special condition for the Papacy since their presence was across Europe through their cardinals.

I think that either your trade range or colonization range is your diplo range. Pretty sure it is trade range. You can see trade range on sea tiles. So invade morocco/granada/aragon. It might be tied to CE and the travel mechanic, in which case closer ports should help. Papacy also starts in Avignon so that may affect all of the above potential ranges.