Well, you have been in his life for ten years, so I think it is fine and understandable that you have a close and loving relationship with your DSS. Good for you = you have obviously done something right.
But - you asked if you are overstepping, and your DSS's mum has told you she's not pleased. And yes, I think you are. I'm not going to say that you are trying to buy his love or even that you are trying to undermine or replace the mum, I want to give you the benefit of the doubt. I think you are probably just "trying to make him happy" and perhaps not making some great parenting decisions as a result.
I'd certainly be upset about some of the things you describe. Hell, I'd be upset if my DH did some of those things with our own kids! No one wants to look like the "bad cop" because they are trying to put limits on a child or have some house rules, while the "good cop" gives the kid whatever they want and gets all the fun.
I would suggest that, if the relationship is such that you think it would go over ok, you talk to DSS's mum. Tell her the truth - that you didn't realize you were making things tough on he. Ask her to explain the rules she has for DSS, so that you can work with her instead of against her. (Is he allowed sugary cereal at her home? How often? Would it be OK for you to buy him one treat when you take him shopping?)
You are a parental figure to DSS when he is in your home, and you should of course be entitled to act as one; you and your DP shoudl have your own house rules and the mum doesn't have to agree to those anymore than you can set rules for her home. But since he lives with his mum most of the time (it sounds like you have him on weekends?), it wouldn't hurt to at least be respectful of her rules. She may not feel that you are, presently.
By the way - When my DSS was 12 he would still cuddle with me at home, but he'd have died before doing it in public - that was about the age he was outgrowing it, and sadly, it is a rare thing to get as much as a hug these days - I think you have to keep your DSS's age in mind and not take it personally or get upset about it.
TBH, that applies to some other things, as well. It does sound like you are pretty indulgent with him. - think perhaps you are babying him a a bit, which is probably difficult for his mum, who may be trying to encourage him to act a bit more maturely as he is becoming a teenager soon. And frankly, you are going to end up with problems on your hands - a teenager who plays you off against his mum, and an ex who is angry with you.