Yes the diode in your link would be suitable for retrofit to a plotter. If depron foam cuts anything like EPS or XPS it will need very little power. If that laser can cut 3mm MDF it will have no problem with the foam, ask the seller to confirm.
I just clicked on the video, not very impressive... it's moving very slow cutting thin anti static open cell foam that I doubt it would be much use.
It's also expensive for a 1W 808nm diode, although the integrated focus lens is nice.
Here's a 1W diode with TEC and PSU for much less:
http://cgi.ebay.com/1W-808nm-Infrare...item1e582d83c2
I had a 200mW 650nm diode from a DVD burner and it would cut 2mm EVA foam (fun foam) much faster than that video. It was being over driven at about 230mW with TEC cooling and cost all of $60 (45 quid).
Zax.