More info needed...........
I don't think we can yet conclude that the pilot was actually 'throwing away altitude' to comply with ATC as has been suggested. If you read the sequence it states all the level clearances for descent as they were given, but the aircraft was already below the previous nominal altitude. It may be a case of the ATC clearance being given reprospectively as he had already descended through the previous cleared level. In other words ATC may have been watching the descent and just giving him the airspace so he didn't have to worry about the traffic/terrain at that point. I can't conclude whether the descent was dictated by lack of aircraft performance or by a decision of the pilot.
If I had no doubt about my aircraft's ability to hold height I wouldn't commit to an engine out landing in fog when there's an better airport a short distance away.
Conversely if I had an aircraft which was definately unable to maintain altitude I would then be very interested in a nearby runway even if it did have fog.
The variable of performance would be very much what determined my decision.
Piston twins do have very real performance limitations but for a simple failure and shutdown even if it wasn't performing I'd be thinking a descent rate of approx 200 fpm with everything secured, not the 800-1000 fpm we had here. (I've got just short of 2000 hours in Chieftains, albeit a long time ago.) Perhaps the failure was NOT so simple. I still think there is more to this than we know yet.
More info needed.............