I've been browsing around the internet and these forums but haven't quite found any useful advice on this subject.
So for intimidation, it's described in d20pfsrd
You can use this skill to frighten your opponents or to get them to act in a way that benefits you. This skill includes verbal threats and displays of prowess.
Obviously it's based more on GM's discretion for what I'm asking, I'm just looking for advice on the subject.
Intimidate can be used in many ways like Diplomacy don't you think?
For example. You take a Militia commander, or some diabolic leader. Would said person try to "Persuade" his army to march onto their deaths through "Diplomacy?" Or "Intimidate?" of course it would be intimidate! Strike fear into their hearts. Either they stay and die in battle! or they run like little cry babies to be tortured by their leader later on.
Sooo ya anyway.
I'm looking for examples, as to how players and DM's have used intimidate in combat, not only to scare enemies.. but to instill fear in allies hearts to fight beside them.
Can you elaborate what is your rule question ?
Intimidate is already a way to make someone act friendly toward you, as if you tried to make a diplomacy check against someone friendly, you pointed that out. I don't see anything else to say.
Note that you don't need to use intimidate to make yourself a reputation of a villain.
Unfortunately intimidate just doesn't work like that. An intimidated character won't act in a way that endangers itself. And bad things can happen once intimidate wears off.
Advice then - GMs discretion. But remember that different types of diplomacy apply depending on whether you are in a nobleman's hall, an army barracks or a bandits camp.