Redwolf wrote:"Dia duit" is actually extremely formal, and rarely heard in the Gaeltacht. They're more likely to use a form of "how are you?" (Which form depending on dialect. In Donegal, you'd say "cad é mar atá tú?) or some other comment. "Dia duit" is usually reserved for strangers on formal occasions.
By the way, "maidin mhaith" is quite common in the Donegal Gaeltacht. Your friend from Kerry may have been confused by the Ulster convention, since I presume most of the people she would have been working with in the BBC would have been Ulster Irish speakers. The very formal way of saying "good morning is "Dia duit ar maidin."
Irish-speaking atheists say "Dia duit" the same way that English-speaking atheists say "goodbye" (which comes from "God be with you") or Spanish-speaking atheists say "adios." The greeting may literally mean "God to you," but is essentially divorced from that meaning in terms of everyday use. I have atheist friends who quite happily say "Dia duit" and don't bat an eye (though they appreciate the irony). It's the same way with "slán" (goodbye), which technically means "safe/healthy" (it's a shortened form of "slán abhaile"..."safe home"). People don't say it thinking of it as a caution or a wish for good health, however...it's just what you say when leaving someone.
Again, I was aiming for a bit of humor at the end there...
Indeed, I noticed when I was recently in Belfast that most of the Irish I heard was Donegal dialect. Many of the people that I met there had been to Irish colleges in Donegal, and one young woman I met had been raised as a native Irish speaker in the Bóthar Seoighe/Shaw's Road mini-Gaeltacht. Her Irish nonetheless sounded distinctly Donegal-esque as well because presumably her parents had learned their Irish from Donegal Irish speakers. My friend from Kerry mentioned that she's had a couple of miscommunications with people due to some of the pronunciation differences between her speech and that of her friends/co-workers.
I seem to recall quite a few people greeting each other with "Dia dhuit/Dia is Muire dhuit" when I was spending the summer in Kerry a number of years ago. (For instance, when people went into shops and things.) I suppose I heard it more often among older people, though. Greeting someone with "Conas tá tú/Conas tá agat/Cen chaoí a bhfuil tú/Cad é mar atá tú/Ciamar a tha thu?"probably works fine if you know that person already, but I'd guess it would seem a bit odd to someone if uttered by a stranger. I still find it weird if a stranger says something like "Hey, how's it goin'?" to me on the street.
Part of the reason I brought much of this up is that there's a debate that's recently been going on on another message board I peruse from time to time, the http://www.foramnagaidhlig.net
Scottish Gaelic message board, about just how you go about greeting a stranger in Gaelic. The most common conclusion seem to be that you'd probably be strongly inclined to switch to English because if you're a Gaelic speaker, chances are most of the people you tend to speak it with will be people that you know. Indeed, there's quite a lot of evidence from minority speech communities the world over that people will feel a strong inclination to switch to the dominant language of the region when they encounter people that the don't know, even if said people attempt to interact in the minority language. In this regard, some of the speech acts that occur among strangers at places like Sabhal Mòr Ostaig, Oídeas Gael, and elsewhere might strike some native speakers as inauthentic or a little odd because people are compelled to use Gaelic/Irish all the time, even when it wouldn't seem natural for a native speaker to do so.