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SaaSHub
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Have you tried https://github.com/whiteinge/diffconflicts
As you pointed, vim does not allows to compare lines partially. I have posted https://github.com/rickhowe/spotdiff.vim, which allows to specify the line range to compare.
In addition, vim only supports line-by-line comparison. I have posted https://github.com/rickhowe/blockwisediff.vim, which compares selected continuous lines as a virtual single line.
In your original post, y-c-c mentioned that git diff --word-diff does what you want. Did you experiment with using git to provide diffs like vim-diff-enhanced does?