Test it out however you like. Your example would work. Once you find out, bind the physical buttons to the appropriate RetroPad virtual buttons. If you have explicit diagonals, bind each to both of the corresponding cardinal directions (up-left to up and left, up-right to up and right, down-left to down and left, down-right to down and right) in the config file, which may require some research. If not (which is much more likely), bind each cardinal direction to the corresponding RetroPad virtual cardinal directions (up to up, down to down, left to left, right to right). In that case, if you find it difficult to use the diagonals, it’s the fault of either the controller’s construction/attrition/design or the way you’re holding the directions.
I used to have a Logitech controller which had explicit diagonals, by the way, so I know your struggle.
Edit: Tip for testing: I discovered that mine had explicit diagonals in standalone Nestopia, so that might be worth trying.