Is there also the possibility that the courts partially but not completely strike down the order? e.g ruling that people legally in the US (even on a temporary basis) are "subject to the jurisdiction" but those who have entered the US illegally are not.

Deportation of diplomats is not an appropriate comparison for the concept of jurisdiction. The question should be, "if I commit a crime, can the host punish me for the crime (beyond expulsion)?" If the answer is "yes", then I am under their jurisdiction. Nobody, especially not the anti-immigration crowd, is going to argue that undocumented immigrants are immune from prosecution for any crimes they commit on US soil.