You're consuming virtually no fat so your body is burning as much as it can from what is stored. Plus you are in energy deficit and losing weight quickly — more than 0.67 pounds a day, or 4.7 pounds a week. That's a 2345 calorie deficit each day. The result of burning lots of fat, and especially with rapid weight loss, is the production of ketones, and that is what you are smelling. Your body needs the fuel because you are starving it, and it has to get the energy from more than just carbs, and so it recruits fat from adipocytes (cells where the fat is stored). Ketosis in type 1 diabetes is dangerous (ketoacdidosis), otherwise with the rapid weight loss and no diabetes you will have elevated ketones, but it won't be dangerous (just make sure to flush them out with water - don't let yourself get dehydrated). And yes, you are almost certainly catabolic in terms of muscle because your protein intake is inadequate for proper muscle nutrition and recovery and growth (lacking the necessary amino acids), plus you are exercising at very high intensities and very often. Imagine driving your car very hard and fast without much oil in the engine, and you get the idea. When people lose weight rapidly, and especially without adequate protein, and with high intensity cardio, they can lose as much as 35% of their weight from muscle. No doubt you will lose muscle with the type of weight loss, cardio, and nutrition you're doing.
Ketone production is very common when people lose weight rapidly, especially with intense exercise (whether the diet is high or low carb). It occurs when people go on high protein diets with low carbs (like Atkins), but also like what you're doing, mostly because the weight loss is so rapid. If you increased your calorie intake, started losing weight slower (1-2 pounds a week), and started consuming 20% of your calories from fat, the smell would diminish or go away completely. Start searching online for search terms such as acetone, ketones, ketone bodies, exercise, and rapid weight loss, and you'll come up with information about this.
Take care. Rich