Firstly I don't think what you are calling a fast bounce, is what is what we commonly refer to as a bounce.
When you dropped to 1.75, he stayed high because you took a 0,5u reduction instead of a 0.25u, the 1.75u wasn't enough for him at that point so you didn't see him come back down into green. He did bounce after he hit those lime greens, he would have done that whatever you shot, the problem was he didn't clear the bounce (get back into good numbers) because you reduced by too much
this is the definition of a bounce taken from the basics sticky, not all high numbers are bounces.
- Bouncing - Bouncing is simply a natural reaction to what the cat's system perceives as a BG value that is "too low". "Too low" is relative. If a cat is used to BGs in the 200's, 300's, or higher for a long time, then even a BG that drops to 150 can trigger a "bounce". Bouncing can also be triggered if the blood glucose drops too low and/or too fast.The pancreas, then the liver, release glucogon, glycogen and counter-regulatory hormones. The end result is a dumping of "sugar" into the bloodstream to save the cat from going hypoglycemic from a perceived low. The action is often referred to as "liver panic" or "panicky liver". *Usually*, a bounce will clear kitty's system within 3 days (6 cycles).
I do think that Wally will bounce after getting into these lime greens, he may well shoot up quite high by PMPS, it seems to be the way he rolls.
The big question is what is a good safe dose for Wally.
He is bouncy and a long term diabetic, on TR when using a human meter you have the three drops below 50 option to try. I know it was suggested that you could try three drops below 68, and if he had only been just below 68 I would have said hold, but he was 42.... I just feel that is cutting it a bit fine, it might equate to a number in the 30's or even the 20's (George tested 27 once and had no symptoms other than he was demanding food, wouldn't move away from his bowl)
So with today's numbers if I were in your shoes I would take the reduction to 1.75u, and see where he lands when he clears the bounce.
But one thing that we can try, to help him clear the bounce more quickly, is
Shooting through the Bounce.
So if tonight when you get pmps he is pink or higher (That would be him starting his bounce) you would shoot 2u tonight, and then take the reduction in the morning. You
ONLY hold the 2u for one cycle, and
ONLY if he bounces.
If he doesn't bounce, so he's green blue or yellow you take the reduction tonight. (he's been staying flat so far so you never know)
Going forward, given he is a long term diabetic, and bouncy with it, if I were you I would swap over to Human meter. It gives you more options for dosing strategies that will help a bouncy long term diabetic. the freestyle freedom lite uses a tiny sample like the pet meters, its easy to use, I have it as my backup and its the one my petsitter uses when she looks after george.
what are you thoughts?
naughty Wally. 
.
Any chance you can start getting at +12 as your PMPS reading? A lot can change in 30 minutes. Gill's advice to get a +11 was incase Wally throws a curve ball and we can source help before your shot time 
I wait 7ish minutes and give another third of his food and then feed the last third a bit after. This whole ordeal is generally successful (i.e. no throw up unless I rush the feedings).
glad we're on the same page! so looks like 1.75u tonight.