I don't think E/W were not damaged. I'm not sure what would I do at the table, but hearing the bid explained as hearts with a minor, the 3
♦ as gameforcing on diamonds is perfectly natural (and gives the partner the message that opps' minor is most likely clubs... (And 3NT from opener would then definitely promise stoppers in both suits.).
I would have bid 3
♦ even over natural hearts, definitely not 3NT like this, though...
The double on 4
♥ was right, assuming that opener believed responder has a stopper

- but I don't think this was a two-way shot.
You can do twoway shots when you know before the play commences that opps failed to alert something - you try to get a good result and if it fails, you call the TD and complain.
Here it is the typical case of the overcaller's responder KNOWING that he has a good hand - either two superfits or a void in partner's second suit and a ton of small trumps to ruff with. (Again, it is somewhat likely that most ppl would bid 4
♥ with this hand no matter what the 2
♥ promises, if it includes 4 hearts :-))
So, I think that although E/W bid poorly, an alert of 2
♥ with proper explanation might quite well push them to bid more correctly. If the responder answers honestly that he would bid 3
♦ over 2
♥ if he knew this promises two suits, then the damage is obvious.