Having been there plenty of times I can confirm that the picture is Dubrovnik and that LH certainly do not normally fly there with the A340. Judging by the webcam the weather was pretty nice.
Land at next suitable airport means just that. Wise advice when in doubt is get on the ground asap. Greece and Germany are not exactly close not to mention the high ground in between and the nearest italian airfields like Bari or Brindisi are not obviously more attractive to anyone who knows them well.
I do agree that the Croatian coastal airfields can be a nightmare when the Bora wind is blowing. But on a normal day it is an ideal diversion airfield, easy to find nice straight in ils from the north and a really nice city.