I like this version better than Diarmuid. Even though I usually dislike anglicized names, Diarmuid reminds me of a prissy little boy, while Dermot seems like a stronger name.
The name sounds ultra-Irish to me, and thus a bit out of place elsewhere, even if the person was born in Ireland or has Irish parents. It's not such a horrible name desoite the long schwa, as the Irish pronunciation sounds kind of cute, but it is old-fashioned, and likely to sound ugly elsewhere.