I believe the suggestion has been made that the "domed" reference suggests a link with Newgrange. At any rate here is what Alexander MacBain in "Celtic Mythology and Religion" (Cosimo, 2005) had to say about the passage:

"This very unsatisfactory passage was greedily seized upon by those that favoured the "Druidic" origin of the stone circles, but it may be doubted that the isalnd referred to was Britain at all - for Diodorus knew Britain perfectly well, and would have likely told us so, if this Hyperborean island was the same as Britain. And again, no people is more mythical than these Hyperboreans or dwellers beyond the north wind. The temple, too, was not merely round; it was also dome-shaped, like the Gaulish and British houses. How far does this agree with Stonehenge ? It is useless to build or prop any theory on a passage such as this".

I think I would have to agree with Alexander MacBain on this point.