I currently use the following to do auto refining: (modified from
http://emacs.stackexchange.com/a/28321/2755 )

    (defun my-diff-refine-all ()
    "Refine all diffs."
    (interactive)
    (save-excursion
        (goto-char (point-min))
        (ignore-errors
            (diff-beginning-of-hunk t))
        (ignore-errors
            (while (not (eobp))
            (diff-refine-hunk)
            (diff-hunk-next)))))
    (defun my-diff-hunks-highlight-all ()
    "Highlight all hunks in diff-mode."
    (add-hook 'font-lock-mode-hook #'my-diff-refine-all t t))
    (add-hook 'diff-mode-hook 'my-diff-hunks-highlight-all)

Not sure whether it is possible to merge into Emacs after some
adjustment.