I am mostly concerned about the first step. Are there any species in this mechanism that look too reactive for this mechanism to make sense? Any thoughts would be greatly appreciated.
The accepted mechanism is here: 1
KOH attacks the carbonyl of the urea, the tetrahedral intermediate breaks down with Me-N=N-O- leaving. This picks up a proton from solvent to give Me-N=N-OH. The second step is OH- removing a proton from the Me group of Me-N=N-OH which then loses OH- giving diazomethane.