"But I'd REALLY like to get the garage somewhat livable, and I don't want to throw $1,500 at the heater. I'd be happy if I could keep it at 45-50 degrees..."
Well, the WORST way to do that is to throw $1,500 at a heater and do nothing about sealing it up.
Spend a couple hundred fixing the gaps and worst of the leaks. Add some foil-faced foam board to the ceiling. Don't worry about the walls until you insulate the ceiling. You lose most of the heat out the ceiling, and the foil faced foam board will both insulate and reflect heat, which is a bonus.
I would be VERY leery of running one of the Kerosun style kerosene heaters on diesel. Impurities can cause the carbon monoxide output to ramp up.
Go with the torpedo heater Ben suggests.