The amount of protein you need, and the amount of protein you can process without hurting your kidneys, is directly related to how much you exercise. Gluconeogenesis only kicks in if you are eating more protein than you require for maintenance or building of muscle. The real problem you’re describing is not that diabetics eat too much protein, it’s that we tend to not match our protein intake and exercise.
Which isn’t surprising, considering that the ADA recommends just walking 3 times a week, which doesn’t actually do an enormous amount for your heart, your glucose metabolism, or anything else. It’s good, assuming that “bad” by comparison is sitting or lying down 24 hours a day. If a diabetic actually gets out and exercises seriously, by which I mean a combination of endurance and strength-training, you can do extraordinary things for your metabolism. And your kidneys will thank you while you’ve been eating all the protein you can stomach.