I sure hope she left you with more instructions than just that. Also, I've never heard it referred to as diabetes. Yes it is diabetes but you'll find better information under Insulin Resistance or Equine Metabolic Syndrome (EMS).
In replacing hay with BP, you susbtitue # for #. So if you're reducing his hay 3# than add 3# BP. For starters only mix up 1-2C dry BP (add 2x the water) and see how he likes it. Most horses need a little time to accept it so only mix up what he'll eat now and build it up. In cold weather, you can leave it until the next meal but as things start to warm up it will start to ferment in about 8-12 hours. If you go with the pellets (cheaper than shreds) it takes about 2 hours with cold water. You can speed it up to about 20 mins with hot water. It's easiest to just make the next meal when you feed the current one.
The advice to feed BP is based on the assumption that it will be lower in NSC than the hay it replaces. That's not necessarily true so it's best to test your hay so you know weither or not that even something you have to deal with. Warm season grasses (Bermuda, Bluestem) tend to be lower in sugars than cool season ones (fescue, timothy, orchardgrass...) Horses also need the longstem fiber of hays so don't eliminate them totally. Soaking the hay for 20 mins before you feed can drop the sugars 2-3% as well if they're boarderline. Hopefully she also advised you to eliminate all feed (including senior) and replace it with the BP and a ration balancer or the BP and just a loose mineral/vitamin.