Hi @Rusty,
Easel only supports “inside” and “outside” cuts on closed paths—that is, ones that form a complete loop—the reason being that open paths don’t technically have an inside or outside. Sometimes, like your project here, there’s one side that’s intuitively correct, but that can be difficult to codify in software. For example, which side should be the inside of an “S” shape, or a straight line?
We consider it a bug that Easel lets you set open paths like that to have inside or outside cuts and doesn’t explain the problem. And another bug that sometimes the 2D side makes it look like Easel can do the inside or outside cut.
The shape will actually be cut on-path, so you’d have to offset it manually in your design.