How to handle dummy's revoke due to a hidden card?
I am not a TD, but I am a qualified Club Director, and this situation is actually a fairly clear one. Under the Laws of Duplicate Bridge , laws 61-64 govern revokes. It is a common misunderstanding that there is no penalty if the dummy revokes. There is no automatic adjustment in such cases, but the Director should attempt to restore equity, and a proper rectification should be made.
I quote only the relevant sections of the laws below, for reasons of space. Please see the full laws linked above (2017 version).
Law 61 A defines revokes:

Failure to follow suit in accordance with Law 44 or failure to lead or play, when able, a card or suit required by law or specified by an opponent when exercising an option in rectification of an irregularity, constitutes a revoke.

The situation described is indeed a revoke.
Law 63 A provides:

A revoke becomes established:



when the offender or his partner leads or plays to the following trick (any such play, legal or illegal, establishes the revoke).
when the offender or his partner names or otherwise designates a card to be played to the following trick.
when a member of the offending side makes a claim or concession of tricks.


The revoke described in the question has indeed become established.
Law 64 B provides:

There is no automatic trick adjustment following an established revoke (but see Law 64C) if: ...



the revoke was made in failing to play a penalty card or any card belonging to dummy.


Law 64 C provides:

When, after any established revoke, including those not subject to trick adjustment, the Director deems that the non-offending side is insufficiently compensated by this Law for the damage caused, he shall assign an adjusted score (emphasis added)

Such an ADJUSTED score would be appropriate and required in the case described.
Law 12 A provides:

On the application of a player within the period established under Law 92B or on his own initiative the Director may award an adjusted score when these Laws empower him to do so.

The Director may award an adjusted score in favor of a non-offending contestant when
he judges that these Laws do not prescribe a rectification for the particular type of
violation committed.
The Director awards an artificial adjusted score if no rectification can be made that will permit normal play of the board (see C2 below).
The Director may award an adjusted score if there has been an incorrect rectification of an irregularity.


Law 12 B provides:

The objective of score adjustment is to redress damage to a non-offending side and to take away any advantage gained by an offending side through its infraction. Damage exists
when, because of an infraction, an innocent side obtains a table result less favorable than would have been the expectation had the infraction not occurred.

Law 12 C1 provides:

(a) When after an irregularity the Director is empowered by these laws to adjust a score and is able to award an assigned adjusted score, he does so. Such a score replaces the score obtained in play.


(b) The Director in awarding an assigned adjusted score should seek to recover as
nearly as possible the probable outcome of the board had the infraction not occurred.


(c) An assigned adjusted score may be weighted to reflect the probabilities of
a number of potential results, but only outcomes that could have been achieved in
a legal manner may be included.


(d) If the possibilities are numerous or not obvious, the Director may award an artificial adjusted score (see C2 below).

and 12C2(a) says:

When owing to an irregularity no result can be obtained [see also C1(d)], the
Director awards an artificial adjusted score according to responsibility for the
irregularity: average minus (at most 40% of the available matchpoints in pairs) to a
contestant directly at fault, average (50% in pairs) to a contestant only partly at fault, and average plus (at least 60% in pairs) to a contestant in no way at fault.

The director could attempt to go back to trick 2 and determine what would have happened had the revoke not occurred. Presumably the declaring side would have then lost trick 2. But it may not be at all obvious what the defense would have led or how the declarer would have played on such a lead. If the declarer has the remaining winners such that they can be cashed no matter what the defense does, the director could simply transfer trick 2 to the defense. But if there is significant uncertainty about the result in such a case law 12 C (1) (d) would most likely be applied, and the director would assign an artificial adjusted score.
Both sides have a degree of responsibility for the dummy, but the declaring side has the primary responsibility. Specifically, under Law 41 D the dummy player is responsible for properly displaying the dummy's hand. I would, in such a case, assign the declaring side an average minus, but assign the defense an average, not an average plus. There is an argument for giving both sides average, and for giving the defense average plus, but I think the defense is at least &quot;partly at fault&quot; here. So that would be my ruling on the facts stated above, if the outcome with the diamond loser were not rather clear-cut.