hi danny! funny how this forum works and the cats and their stories get into our brains - or at least into mine! i woke up this morning nearly 2 hours ago (5am my time) and was trying to go back to sleep, but really thinking about your question and nelson. so thought i'd return to you this morning.
you asked if cats go into remission like that - but really the question we can answer is "do cats become diet-controlled?" that answer is absolutely. we have about one cat every week or two become diet controlled. We've been celebrating with Amy because Ruby's OTJ party has been this week. once a cat is diabetic, they remain diabetic but they may be able to become controlled with only a proper low-carb canned food diet. if they go back to eating a higher carb diet, they return to needing insulin. I'm unaware of any cat that has gone off of insulin while still eating dry food. perhaps it's happened, but i don't know of any. reducing the carb load allows the insulin dose to drop, the pancreas sputters back to life, and then some cats are able to go off. the dose they go off from is usually .25 or sometimes less, perhaps even .5u if the cat is very newly diagnosed, but i've never seen a cat still needing a larger dose go off.
in your situation yesterday, nelson is giving you signals that he's ready for an opportunity. having a cat stop bouncing is fantastic - and he was coasting along very nicely without bouncing. i just hate hate hate to say it more, because i know you've already heard it a hundred times & don't like to hear it, but dry food carbs are like giving him ice cream, candy and cake every day, increasing the insulin dose to compensate for those carbs, and then hoping he is going to do better. it's one of those truths that there is just no way around, and i don't know how to offer advice without including this every time - because it's that important.
if you decide you can move him off of the dry food, yes, he may be able to become diet-controlled. you won't know til you try it. if you want to make the move off of the dry food, do it gradually because he will not need as much insulin when he isn't getting so many carbs. you would increase the percentage of canned food and slowly decrease the percentage of dry food over the course of perhaps 4-5 days, monitoring for signs that the insulin needs are reducing. dry food carbs can stay 24 hrs or so in the body.
i agree with libby about the dosing. you're seeing progress - it's like gathering momentum and you don't want to lose it.