Actually, the Anabolic Diet is a ketogenic diet; it is a CKD (cyclical ketogenic diet). There are several excellent posts on CKD on this website, and I would suggest you check them out. Since you are diabetic, these diets might not be for you.
I think people try to cut carbs while dieting because carbs have a fat-sparing effect that has to do with the release of insulin. Once again, I don't know if the rules change for diabetics, but if you eat less carbs and can consequently use less insulin, I would *imagine* this might help, but I'm not 100% sure.
-RM