I don't think it was a dive. Aside from the player not reacting (although that doesn't necessarily mean it's not a dive, and we shouldn't only book players who appeal), he looked too far away from everybody to dive, and nothing suggested he was preparing for it.
The referee is poorly positioned, and by the looks of it he's seen a foul which isn't there.
As an assistant referee, your job is to follow the referee's instructions. He or she is the referee, they have made the decision, they haven't involved their assistant so its their call. Running on the line you may not of seen it clearly. If they came over I'd tell them what I'd saw and that it wasn't a foul but once a referee has made a call like that they won't be coming over and I won't be calling them to me.
Would speaking to the referee be ASSISTing or INSISTing here?
The referee has very clearly made the wrong decision. If, as the AR, you can see that there is absolutely no question that the player hasn't been touched then IMO the AR should be speaking to the referee here. that IS helping the referee. IMO we place way too much value on these esoteric notions of 'looking like a team' and crap like that rather than actually getting decisions right. Just one of the many problems of refereeing these days. It should be the rare case when the AR has to say 'that wasn't a foul', but the AR should be able to do so at times. And if you can see the nearest player was 2 yards away, then that should be one of those cases.
Awarding a blatantly wrong penalty makes the team look far stupider than one of the team members saying 'hey, wrong call buddy' and the other saying 'ok, cool, thanks for your help, I've got it right now'. More people in power and coaching roles need to realise that, IMO.
Now, if only we actually took 'mobbing the ref' seriously, how many cards would we have there for dissent? ;-)