This paper gives a comprehensive numerical analysis of a Low-Reynolds number hypersonic diffuser designed for the upgraded 1.6 MW Arc-Heated Wind Tunnel (AHWT-II) facility at the University of Texas at Arlington. The numerical study includes the detailed investigation of the high-temperature, viscous, chemically-reacting non-equilibrium hypersonic flow field inside the diffuser with high fidelity computational fluid dynamics (CFD) simulations at a number of diffuser exit pressure conditions. The CFD analysis is used to evaluate the overall performance of the configuration at selected operating conditions and provide wall heat flux values for the numerical analysis and design of an active cooling system for the thermal management of the diffuser. The CFD results are obtained with non-catalytic and fully-catalytic wall assumption to bound the estimated heat flux to the diffuser walls. Besides heat flux, the effect of surface catalyticity on the flow field is discussed. A detailed numerical analysis focusing on active cooling of the diffuser is presented.