I read through your question, and the first thing I have to say is that your husband's case is very complex. He was basically told he had less than a
year to live in 2008, and now he has lived for 2 more years. Your main question is really about his shortness of breath. I know from personal experience that it is really hard to watch someone with breathing problems, as they struggle with the smallest task. They often can be anxious as well, as being breathless can be scary.
I have alot of experience working with people who have had lung cancer and other lung diseases. I know that you have been told that his cancer is stable. Despite this fact, his cancer can still contribute to his shortness of breath. From what you say in your letter, his one lung only has 1/3 its normal capacity, which alone could make him short of breath with activity. Even though he may have "good lung capacity" for someone who smoked, it is still not going to be the lung capacity of a non-smoker. He may even have some emphysema making him short of breath.
Furthermore, radiation pneumonitis, which is one of the side effects of radiation therapy, causes chronic inflammation of the lungs. When symptoms of this do occur, they include shortness of breath upon activity, which is what your husband has.
I think your husband is short of breath is due to his cancer, smoking, and radiation pneumonitis put together. I am sure the doctors would give him more steroids to improve his breathing if they could, but his diabetes would be even harder to control. You can absolutely take him for a second opinion, but I think if you did this you would hear the same story his doctors are telling you now. I would not drag him to some place far away, especially if it would be hard for him to do.
What I would recommend:
1) Has he tried oxygen therapy? This can sometimes help reduce breathlessness. Portable fans can help reduce the feelings of breathlessness too.
2) Has he tried nebulized breathing treatments? Sometimes they can help open the airways and improve breathing.
3) I do think more steriods would be helpful, but I am also worried about the effect they would have on his diabetes.
4) Have you tried small doses of morphine or ativan to reduce his "air hunger" and the anxiety that being short of breath can cause? I have seen these work very well in some people.
I wish you both luck.