Recently, innovative model aggregation methods based on knowledge distillation (KD) have been proposed for federated learning (FL). These methods not only improved the robustness of model aggregation over heterogeneous learning environment, but also allowed training heterogeneous models on client devices. However, the scalability of existing methods is not satisfactory, because the training cost on the server increases with the number of clients, which limits their application in large scale systems. Furthermore, the ensemble of existing methods is built from a set of client models initialized from the same checkpoint, causing low diversity. In this paper, we propose a scalable and diversity-enhanced federated distillation scheme, FedSDD, which decouples the training complexity from the number of clients to enhance the scalability, and builds the ensemble from a set of aggregated models with enhanced diversity. In particular, the teacher model in FedSDD is an ensemble built by a small group of aggregated (global) models, instead of all client models, such that the computation cost will not scale with the number of clients. Furthermore, to enhance diversity, FedSDD only performs KD to enhance one of the global models, i.e., the \textit{main global model}, which improves the performance of both the ensemble and the main global model. While partitioning client model into more groups allow building an ensemble with more aggregated models, the convergence of individual aggregated models will be slow down. We introduce the temporal ensembling which leverage the issues, and provide significant improvement with the heterogeneous settings. Experiment results show that FedSDD outperforms other FL methods, including FedAvg and FedDF, on the benchmark datasets.