Why does the U.S. government allow visiting diplomats to obtain this protective status? Do U.S. diplomats serving in foreign nations receive the same level of protection? Does the individual diplomat, or the nation which the diplomat is working for, actually own the protective status? Can the home country waive the diplomatic status and allow the offending diplomat to be prosecuted? Is diplomatic immunity a fair legal practice? How does a person's diplomatic status affect what a police officer/police agency can do in relation to the investigation of a criminal offense? Are diplomats and consulars treated differently under these policies? Please thoroughly explain your view, citing examples when possible.

The U.S. grants visiting diplomats and consuls what is called "diplomatic immunity," or freedom from prosecution by local laws, partly because this type of immunity has been a tradition throughout history. In 1708, Great Britain first granted diplomatic immunity to foreign emissaries, and this tradition was adopted by the U.S. in 1790. This type of immunity is also granted to U.S. diplomats abroad, as part of the international code of law that was developed by the Vienna Convention on Diplomatic Relations in 1961. The idea behind the law is that countries grant foreign emissaries the immunity that they want for their own emissaries abroad.
The protective status is not conferred directly on an individual but on an individual who represents a state. The Vienna Convention (see the link below for the complete document) states the following:

"the purpose of such privileges and immunities is not to benefit individuals but to ensure the efficient performance of the functions of diplomatic missions as representing States."

A diplomat's home country can revoke the diplomat's immunity and allow the country where the diplomat is living to proceed with a prosecution. The home country can also declare a diplomat a persona non grata, or unwanted person, and that person is usually recalled home in such cases. 
It should be noted that, following the stipulations of 1961 Vienna Convention on Diplomatic Relations, most diplomats follow the rules of their host country. Some people, however, feel that diplomatic status is not always fair. For example, police officers can arrest or detain a person with protective status, but that person can not be prosecuted under the laws of the host country. People with diplomatic status also cannot have their homes searched, so they are treated differently under these laws than other foreign nationals or citizens of their host country. Many diplomats in New York City, for example, do not pay parking tickets or fines, so they owe the city a great deal of money. This could be considered an unfair application of diplomatic immunity, but not a serious one. 
 
https://legal.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf