We just went through the process and as a matter of fact, had our interview this morning. My DH is a Type II diabetic, and I was concerned as well. They are basically only looking for communicable diseases (STD/AIDS and TB). They classified him as a Class B ('A' being healthy and so on)
I do know a friend who is having to apply for a medical waiver- original application was denied but her DH is a paraplegic and beginning stages of MS and Type II. They seem confident that the waiver will be approved.
Shouldn't be much hassle, but as a warning, if they do require a medical waiver, there will be an additional cost. Not sure how much tho.