I have about 25 DZ-2500s so far on my layout - longest run right now is about 50' from driver. I originally tried to use the DZ-2001 data driver, and it worked great. I connected the power wires of the DZ-2001 to the same RW transformer supplying power to the DZ-2500s, and the common was connected into my central ground hub where the grounds of all the transformers are connected together. I never fully reversed engineered the DZ-2001, but I believe the optical isolated feeds the RS232 driver, and the RS232 driver is powered by the DZ-2001's Red/Black power wires.
Just for complete information - I have never tried using the Thru/Out status the DZ-2500 is capable of sending down the Serial data line.
However, I changed to using the Lionel SER2 because, in my application, I have both the Legacy command base and the TMCC command base connected together by the Y cable that comes with the Legacy command base. If I attached the DZ-2001 to the Legacy command base, I could command switches via Legacy, but not TMCC. In like fashion, if I connected the DZ-2001 to the TMCC command base, could control the switches via TMCC, but via Legacy. Switching to the SER2 allowed me to control the switches from both Legacy and TMCC
My wiring of Power, Common (common to the Layout ground system), and Serial data from Transformer/SER2 is a bus off which legs are taken, a leg might have one switch, or several switches. The connections from bus to legs are done with Wago connectors.
All my DZ-2500s have the ERR circuit breakout board the is now sold by Lionel. They do have diodes in the derail connections, as the breakout board has the "unbuffered" green and yellow switch throw wires, and "buffered Thru and Out connections which have the diodes (I wish I had a breakboard in my hands as I write this, 'cause my poor memory is telling me there is a low value resistor in series with the diode).
The biggest problem I had was of my own making. I used a four conductor cable (Power, Ground, Serial data, spare) to connect to all of the switches. I used an output of a ZW-C transformer for power. Recall ZW-C is a chopped output transformer. Found the sharp transitions of the chopping crosstalked in the serial data, causing complete failure. Switched to RW, no more problems. Moral of this paragraph - keep Serial data line away from any power wiring that is carrying chopped type power!!! A couple inches should be enough.