Metformin is one of the safest drugs around with very few and manageable side effects. Now, Metformin may, in some people, depelete Vitamin B-12 and other B levels. If this happens, this can induce neuropathy or accelerate your pre-existing diabetic neuropathy. But you can counteract this by taking Vitamin B compelx and B-12 supplements. Also, don't forget that hypothyroidism may also induce neuropathy and that strong statins like Crestor and Lipitor can by themselves trigger neuropathy. Therefore, the neuropathy claim against Metformin may be greatly overstated.
Having said that, you seem to make a valid point about your insulin deficiency. Should someone with insulin deficiency be on Metformin rather than insulin? I was diagnosed w/T2 diabeties but my C-Peptide is at the low end. This seems to indicate I'm insulin deficient rather than insulin resistant. I may have nearly burned out my pancreatic beta cells that my insulin has decreased to a trickle. If so, I may be progressing inevitably toward T1 diabetes and insulin dependence. In other words, I may be T1.5 or LADA.
I think you should see an endo who's familiar with both T1 and T2 diabetes. I had my internist treat my diabetes for a while and I wish I could turn back the clock. Then, I believe you should establish your level of insulin deficiency: get a C-Peptide testing with your insulin and fasting BG levels. With those numbers, your endo should be in a position to decide whether you should be on insulin or Metformin. He may also reassess your T2 diabetic status by testing for antibodies. I don't think a run of the mill GP or internist will be savvy enough to decide what's in your best interest without further testing.