A cutout is a quick and easy way to run open headers when you want and still go back to a normal muffler when you need the less aggressive sound. Its basically like a "V" that is cut into the exhaust pipe between the cat and the muffler and it has a cover on one end that you unscrew to run straight pipes. The exhaust then bypasses the muffler and comes straight out. Supposedly there's a loss of power on the low end but a gain in the high rpm band. I did in fact notice this, especially tonight. I was really surprised when i went for a quick ride and got on the highway. I entered at about 40 mph and punched it. boy did this truck jump, from about 3700 RPM i just went flying. it definitely had a noticeable kick in acceleration. when it's open the truck is a bit more sluggish right off the line but the sound is really worth it!!! There are companies that make electric controls for the cutouts so you can open/close them when you drive but from many friends' bad experiences with burned motors i stuck with a normal one. Here are some pics:
Http://www.quicktimeperformance.com/QTEC/