| Excercise will help get your overall sugars down some, but typically the biggest impact is due to significant weight loss.
Simply walking 30+ minutes a day is a great goal. Adding weights it great too.
The spikes could be anerobic induced, but not likely. They usually happen right away.
You don't mention diet. Many well controlled type 2's probably have much more restrictive diets than you are used to. Get to know them. They do very well.
I know you've heard it before, but don't be afraid of the insulin. It actually opens up many more doors than it closes. The needles really are easy to take. The trade-off complications are not worth it. You'll be crying for those tiny things once they start probing and prodding you with the big stuff. Trust me on this one. | 
