I wouldn't glue the paper to the wood at all. Almost any type of liquid adheasive would likely bleed through the paper over time. Of course, you could use some sort of double sided tape type adheasive.... but I'm not certain how good that would look and/or last over time. Plus, the paper is then exposed to it's enviroment and subject to all kinds of stuff not good for it as well.
I would think about possibly recessing or routing out the wood where the diploma goes. Allowing the diploma to float (attaching it to nothing) in the recess and then securing some type of glass over the recess to protect the paper from the elements and UV rays it will encounter over it's lifespan. You could even take it a step further and attach the diplomas to a nice museum quality acid free matt under the glass.
A trip to a nice frame shop might be in order as well. They might have some products that will aid you in what you are trying to do. Or at least, some better ideas than what I'm able to offer. Of course, the knowlege base around here is pretty high. Hopefully, you will get some decent reply's and ideas here in a bit.
Good luck and nice design BTW....
Last edited by JW_in_Indy; 12-10-2009 at 10:10 AM.