Ironically, I was actually originally planning on having Diesel primarily built around parsing actual SQL. (See the commit message of https://github.com/diesel-rs/diesel/commit/2ba8bf481c3d21d8b..., which is like commit number 4)
I agree that if you're just writing a single self-contained query, SQL is a great DSL for that. I've been trying to improve our story for working with raw SQL (one tradeoff will be that it isn't type checked).
However, there are major benefits to an in-language DSL as well. If you are wanting to re-use fragments of queries, or conditionally construct a different query, that's a pain to do with SQL strings.