They can do a blood test to check for kidney function to determine if the cat can go under anesthesia. If it's ok, they can go under. This vet doesn't sound like he's offering a clear plan of action--you're just overwhelmed.
You can give lactulose to a diabetic cat to stimulate bowel function. It's a cheap, delicious syrup you can get from the vet. Feed canned food if possible, both for the diabetes and to assist in elimination.
Start the insulin now, if that's what you decide. She might turn around very quickly. Female cats seem to be easier to regulate, from what I've seen. Giving the shots is no big deal after the first couple of times. It becomes totally routine and they don't even run away, especially if you give her some turkey as a treat after the shot.
Good luck on what you decide.