LMB,
One problem that is common in individuals with PCOS is impaired thyroid function. Perhaps, that could be one of your difficulties w/r/t losing weight?
As for coming back off of insulin and onto metformin--the answer is that it all depends--which is not the answer you would like to hear...
If your beta cells are underproducing insulin, or not producing insulin, then you will need insulin, regardless. If your beta cells are still functioning (enough production of insulin), such that if you lost weight, and such that your insulin senstivity became increased through that oral med and/or with increased exercise, then yes, you could come off of insulin.
I am not able to give you the full answer on that, though, because really those are things that would be specific to you and your case, and you might want to ask your physician. You could ask those very questions from above: 1) how is my thyroid function, 2) is my diabetes related to insulin resistance, pancreatic in nature, or a combination of both?
Finally, if the diet works for you and you can follow it and keep the weight off, then great. It sounds like you like Atkins, but I hope that you remain open to alternatives. I don't want to say much other than I am not really a fan of that approach, though I do understand that it works for some--just not for me. An ongoing study of people who have lost weight, and kept it off (30 lbs plus) for 3 years or more indicates clearly a number of things. The first, is that it needs to be a lifestyle modification and behavioral change in eating habits. The most startling result, however, was the type of "diet" the participants followed: 95% controlled calorie, low fat, and less than 3% with a low carbohydrate, or Atkins based approach.
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Originally Posted by KatakaNiki
So this means that I probably won't die from diabetes but I will die from a heart attack from being fat and miserable.
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Actually, I have been there and tried that approach (I was 35 at the time)

. I lived, and fixed my weight and misery issues. The heart attack was the only thing that did motivate to fix the real problem behind my diabetes. I played the game with diet alone, and no exercise. It nearly cost me my life and I really thought I was getting away with something. I do hope that you find a way to help reduce your risk, and that you not take the same risks I did.