Yes they graduate with the same diploma. Nothing you can do about that.
Yes you can fail a sped kid. In AZ you have to prove their failing was not do to their personal difficulties and that you modified the assignments according to the IEP. Since this follows IDEA protocals then I assume it is like this everywhere.
The admin may not like it, and the sped teachers will hate you for it but as long as you cover your donkey well with documentation of parent contact and contact with the sped teacher you should be good to go.
It is tough.