Ideally you'll usually have a situation where after X rounds you have 1 undefeated player...IMHO, that guy is the champion and there's no need for a cut of any sort.
Just my 2 yen.
Not a fan of this. That's a single elimination tournament, with some guaranteed games attached. Every game played by anyone with one or more loss is just for funsies. That's not ideal to me. You don't really need the tournament structure to get pickup games in with a room full of players. The cut generally keeps 1 loss people in the hunt and depending on how broad the cut is it could keep players with more losses in the hunt as well.