The diversion dam doesn't really do anything for flood control. As most of the time during the flood season the flume is full and Lake Tapps can't really hold any more water.

Now as far as Mud Mountain Dam, it holds a TON of water back whenever the Puyallup starts getting high. Head up there sometime when the Puyallup has been running high for a good week during the monsoon season and the water lever is usually quite high.
Go there during the summer and there's no water, the river just flows srtaight through the dam.