Hi and welcome!
The walking on his hocks is most likely to be diabetic neuropathy. It is nerve damage caused by prolonged hyperglycemia. The treatment for it is to regulate his BG levels (you can try doing this with diet alone, but most cats do need some insulin support at least for a time) and, if required, to give Methyl-B12 to help reverse the effects of the nerve damage. Feeding dry food, even the DM type, is generally not the best option for a diabetic cat - dry food (with the exceptions of Young Again Zero Carb and Evo) is too high in carbs, especially if you don't plan to start Cheech on insulin. You don't have to feed the expensive prescription foods at all - Friskies or Fancy Feast Classic Pates are a good option - low in carbs and reasonably priced, especially as you're also currently paying prescription food prices for Chong who doesn't actually need the expensive food!!
Can I ask, is there a reason why you don't want to give Cheech insulin? For a lot of cats, it is the key to getting them back into good health - while it is possible for some cats to get back into normal BG numbers with diet change alone, most do require treatment with insulin at least for a time to get them regulated (or even into remission, which is possible but by no means guaranteed for any individual cat).
As regards the signs that it is time to let him go, I think it depends very much on the individual cat. Once they no longer seem to be enjoying life, or appear to be in pain that you cannot relieve for them, I think that's when it is time to start questioning whether or not they have enough quality of life left to postpone the decision any longer.