How could a caged doe even self induce an injury to the point of not being able to use both back legs while retaining feeling yet not having a pain response?
Toxicity might very well be the explanation; I have no experience with what you're describing. The only toxicity event I've dealt with was from lupine poisoning, which affected the entire rabbit - tremors and loss of internal control but not actual paralysis. However...
Caged rabbits can and do seriously injure their backs, necks and legs. Necks and backs get hurt or broken when the rabbit startles and flings itself around the cage violently, hitting the walls or roof of the cage. The leg issues tend to result from a toenail caught in the wire floor, wrenching the leg when the rabbit moves suddenly.
I recently had a young doe inexplicably get injured at a show. She was fine when I put her in the carrier, fine on the first judging table, but on the second table she couldn't move her front leg - it just dangled there. No one saw anything at all that could explain the injury. I brought her home, put her in a secluded cage, and waited. I was just about ready to give up when I saw her gingerly putting the foot on the floor. It took over a month but now she looks and moves normally.
I've had injured rabbits behave exactly as
@CedarRidge describes. Very occasionally they will recover if left in a quiet place - I usually pull them from their wire cage and put them in a solid-bottomed cage with wood shavings. It involves a lot cleaning and placing food and water where they can reach it. I haven't been able to figure out how to tell the doomed ones from the ones that will recover, so it's just a matter of waiting.
And on the question about milk, she can still nurse without her legs, so why not let her?
I agree, I'd try bringing the kits to her to see if they can nurse. You don't have to leave them with her all the time. It's probably pretty uncomfortable for her
not to be nursing them, anyway, if she's still in milk. You can continue to supplement with the formula if it looks like they need it.
Which leads me to my kit question. We are now bottle feeding the kits and giving them the cecoptropes from the doe. She is still producing them at this point and other than her legs not working properly, does not seem to be suffering. (She still nudges balls, eats, drinks, etc.) But, we fear she may not respond to the meds and I'll have to put her down. In the event we do, at what point will the kits be ok without her cecotropes? We have 2 other rabbits but they eat theirs immediately. Current formula is goats milk, kmr, and heavy whipping cream taken readily by the kits.
Meloxicam is just an NSAID, intended to reduce inflammation to alleviate pain and allow healing. Whether she heals will depend more on the problem itself. But if she is still acting normally, I'd allow her to keep trying for as long as she wants to try (you usually know when they're done).
As far as the ceoctropes, they're for colonizing the babies' guts with the proper microorganisms. Once they've been eating them, the babies should be fine even if the cecotropes become unavailable. You can also provide normal poops, which will contain many of the same microorganisms. They can come from the mother, or another rabbit, assuming they're healthy and all eating the same stuff.
In fact if you're giving the mother Meloxicam, it might be better to give the kits poops from a different rabbit. I know NSAIDs can disrupt gut flora in people, so it would make sense they might do the same in rabbits, and it's possible that the mother's cecotropes might be deficient or unbalanced in their microorganisms.
Good luck and God bless.