They're allowed because they're more efficient than a gasoline engine. They've been used heavily in small setups in Europe for decades. When properly maintained, there's nothing wrong with a diesel engine in and of itself. It's the operator that bears the responsibility of maintaining it properly. 95% of diesel-powered small cars are never going to reach their service life limits like the heavy and many medium-duty vocations will. The owners will never require a complete tear down and rebuild of the engine in order to maintain OEM specifications. They will likely never blow rings, drop a valve, clog their fuel systems with junk diesel or the use of non-approved additives or never fail to do simple things like change their damn oil. This is the story of the typical fleet and even owner-operators...although the latter is generally more meticulous since they have more to lose.
But earlier you said that a top-maintained diesel is still going to pollute more than a top-maintained gasoline engine.
If that's true on a per-mile basis, as in a 335d pollutes more than a 335 over the exact same route, then the only advantage of diesel is that it saves the owner money. At the expense of the environment.

