The vnc viewer will connect back to the host PC. So please describe what exactly is timing out and what error you see then.
I'm not sure what the blog post you linked to is really about, but it seems to be horribly outdated. Note that "tethering" is banned from this forum, too. However, that post isn't really about tethering at all. I'm not exactly sure what it is about, though. Please ignore it and refer to tinyapps.org's description when you're on MacOS (and even if you aren't, the kindle side of things would be equal), otherwise refer to the kindlevncviewer thread in this forum.
I notice again that you're running a Kindle DXG with 3.2.1. It might be messed up regarding debug mode, which might be why it does not react properly to the debug commands.
What are you talking about regarding your second point? Is it stuck at a "USB plugged" screen? Would be strange, since this screen is not supposed to appear when in USB network mode.
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