I don't think diabetes has anything to do with your pancreas wearing out or too much insulin production. I think diabetes has to do with too much free fatty acids in the bloodstream constantly, which over time causes insulin resistance and eventually your cells can no longer uptake sugar, so it sits in your blood. I think polyunsaturated fat is the cause, since your body cannot metabolize it efficiently, like it can with SFA and MUFA. FFA's that cannot be burned efficiently that your body also doesn't want to store (hence your body only manufactures SFA and MUFA, not PUFA) would have them floating around in your bloodstream too much, causing insulin resistance.
When you ingest sugar, it is preferentially burned. Imagine consuming sugar, but the FFA's still sit in your blood and you cannot clear them. So now you have lots of FFA AND SUGAR in your bloodstream. Your body can't clear the FFA because it is toxic FFA, and it inhibits the glucose oxidation, so sugar sits in your blood beyond 3 hours and becomes toxic. THAT is what I believe the mechanism behind Type 2 Diabetes is - toxic fats in your blood stopping your body's ability to clear glucose.
A good prescription for stopping that would be a very low PUFA diet and cyclical carbohydrate dieting to restore insulin sensitivity. My opinion.