Well FWIW its the carbs in the cake to worry not so much the sugar. The flour used to make the cake is just as bad if not more so than subsituting the sugar... Saying that I'll honestly say make the cake like your would (there are recipies to help say with the frosting) I'll use chocolate cool whip
cut the pieces small weight so he can get an accurate carb count (or make cupcakes) match it with a low fat good protein low carb meal allow him the responsibility of matching his carbs to his insulin and enjoy.
Plan a family walk after dinner to aid his insulin...
FWIW is he on MDI (multiple daily injections) or an insulin pump.. Its a bit trickier with MDI but doable and easier with a pump to cover some high carb meals.
Deanna