For a T2 not on insulin
and also on a ketogenic diet
and also in a fasting phase then ketones of 4 are acceptable - getting into the "starvation ketones" area, which is good
if that is what you are aiming for.
With a T2 who isn't eating keto (and you certainly aren't) ketones at this level are a serious warning sign.
It suggests that your body is not getting enough energy from glucose (because you don't have enough insulin to get it out of your blood stream and into your tissues) and your body is starting to mobilise fat and muscle as energy sources. This is a bad thing, because the next stage can be diabetic ketoacidosis where your ketones zoom up to dangerously high levels very quickly.
I note that you are stopping taking insulin for a bit to "see what happens".
If you have high ketones then that is probably not a good idea.
I assume your ketones came down again before you were discharged; did they talk to you at all about testing ketones?
I can see why they started you on insulin; high blood sugar
and high ketones is not a good combination.
I would talk to your medical team as soon as possible and ask them about your ketone levels, insulin, and testing for ketones.
https://www.diabetes.co.uk/diabetes-complications/diabetic-ketoacidosis.html
Scary link about diabetic ketoacidosis.
So in answer to your question, yes I would expect them to be more concerned about a ketone level of 4 than about the fact you had diabetes.