You sound as though you are thinking of two choices (1) tell your son to shape up or you'll cut the financial cord OR (2) bite your tongue and keep your promise to help him through grad school. But there are many more choices than this. In fact, there need be no association between your efforts to improve your son's behavior and your financial support of his education. You can make it clear to him that keeping a relationship with you is contingent on mutual respectfulness, and simply walk out of the room when he is disrespectful. If you would not tolerate the behavior from a friend or a partner, then don't tolerate it from him.
Do you think that money is your only "leverage" when trying to influence your son? I hope not: let's hope he has respect for you as a person.
Obviously you are proud of your son's achievements and promise. But I have seen smart, healthy good looking people fail to achieve their potential because of moral/interpersonal flaws such as the ones you mention. You want him to succeed in life, so it makes sense to try to help him change (if he seems willing).
Likewise, I don't think the only options you have is to "observe" or to "manage." Your son is an adult whom you love deeply. There are many possible relationships that are appropriate at this stage of parenting. You can tell your son what you wish for him without trying to directly manage his behavior.