So you are looking for something very thick like an Octo Strip covering then. Diffusion won't help much. Getting it away from the LEDs more will help eliminate individual LEDs though.
As for color shadows:
This is 2 DLED 36s 44" away from the wall, 28" apart from each other. The speaker stands are 15" away from the wall and 2" in diameter. The DLED on the left has the stock diffusion filter in it, the one on the right does not. As you can see, without the diffusion, the DLED increases in brightness by about 20-25% The draw back is a smaller away washed, and it gets color halos faster. This is also all channels full.
The top picture is the DLED with diffusion, the middle is the DLED without, and the bottom is a DLED 36 with double stock diffusion filters. Its hard to tell, but the color shadows are clearly greatest without diffusion, then lessen with each layer of diffusion added. However, the intensity of the light drops rapidly with each layer of diffusion added. So it becomes a trade off, brighter light, more shadow, smaller beam. Bigger beam, less shadow, less light. Less shadow, less light.
These pictures repeat the same pattern above, but they only have the red and green channels full, no blue.
Best option to get rid of color shadows, get some of Elation's Tri-Color LED fixtures. No color shadows at all. For seeing LEDs, make it so the audience can't see then is the best option, followed by diffusion away from the LEDs, and lastly heavy diffusion.
