I'd wondered about that myself. They have all kinds of redundancy of generators on site and they all got swamped by the tsunami. Off site, think higher ground, with underground transmission lines would seem to be well worth the additional cost.
I'm not sure how well underground transmission would have withstood the earthquake. Yes, having the diesels (and their fuel tanks) on higher ground would have helped. I can't help but think that if there were a sufficient power source available a mile or two away, they could have run an emergency overhead line to the plant over a period of 8-16 hours. If I had to guess, I'd say that they were working on something like this already.
There are 3 additional reactors and generators on site that were already in cold shut-down before the earthquake and they'll certainly want to preserve those. They're the newest of the 6 units.