Walter,
How wide is the hyteresis on the fuel cut? I'm guessing the fuel restarts above the soft cut?
If so, the fuel cuts at the limit (all injectors suddenly? or does it cut progressively cut 1,2,3 then all 4) but restarts the fuel flow before the ignition is back on (ie. above soft cut). I would think this setup would allow enough time for the temps to soar in the exhaust valve/port/primary then the fuel flow restarts without good spark (bang!).
I think a "stock" set up would cut the fuel flow but not restart it until the revs had fallen below the soft cut to ensure the sparks were functioning first.
If you want a flat shift setup (that hangs nicely at the limit) you might need another setup. Anyone tried DIY throttle by wire?