It is the same with Diesel, which can be capitalised or not. Do the words Reich and Kaiser have some specific historic value as they are distinguished from non-capitalised words such as halt, ozone, heroin, nickel, semester, etc?
Firstly, it's not as homogeneous as you'd believe it: the New Oxford American Dictionary, for example, doesn't use the capital for kaiser unless it's an official title (see #2).
Secondly, titles typically become capitalized when they become part of a person’s name. So, it would be “the queen was not amused”, but “he said Queen Victoria was not amused”.
Thirdly, names of sovereign states (whether in the present or in the past) are usually capitalized too. So, you’d say “he has nostalgia for the Reich” (implicitly, “the Third Reich”) as you would say “Austria was then part of the Holy Roman Empire”.
Reich and Kaiser are German words, which always capitalises nouns. Since the English language has equivalent words (empire or nation for Reich, and emperor for Kaiser), they are typically reserved to describe the German empire and the German emperor, respectively.
In English, the term the Kaiser is usually reserved for the Emperors of the German Empire, the emperors of the Austrian Empire and those of the Austro-Hungarian Empire. During the First World War, the term the Kaiser—especially as applied to Wilhelm II of Germany—gained considerable pejorative connotations in English-speaking countries.
Reich is a German word cognate with the English rich, but also used to designate an empire, realm, or nation. The qualitative connotation from the German is "(imperial,) sovereign state." It is the word traditionally used for a variety of sovereign entities, including Germany in many periods of its history.
Diesel comes from Rudolf Diesel, the inventor of
that fuel the Diesel engine. I guess it is usually written in lower-case because it's still in use today around the world, and is common enough to be written according to the normal language capitalisation rules. Reich and Kaiser, however, describing purely historical entities, remain capitalized only.
I think you're focussing on the wrong thing. Proper nouns are capitalized, common nouns are not; many words (in the sense of collections of letters) can be both in different circumstances. So Elizabeth II is the Queen of England, and 'the Queen', in British English, almost always refers to her. But there have been many queens (small q) in history. Similarly "the Kaiser approved submarine warfare in 1915" refers to (and could be replaced by) Wilhelm II, while "the kaiser was obliged to take the advice of the chancellor" refers to the post itself (or possibly all holders of it). The fuel is diesel; Diesel is the inventor or a clothing company like Levi's.
Reich is the name of a specific German government. Kaiser is a title, and as such designates a specific person. This makes them both roughly akin to a person's name. We call words like this proper nouns. Proper nouns are capitalized in English.
Thus they are capitalized for roughtly the same reason we capitalize Democrats, and Republicans, and Fred Jones.