If the clutch switch is hooked up to the two step, it will always be a spark cut. Once the update is up, you will see two different settings under the rev-limiter -- spark and fuel. Spark is only recommended for race cars (along with the two step). The rev-limiters are separate from the two step and will work all the time if their limits are reached. The two step must be activated via 12v and hit it's limit to work properly.

I would not recommend hitting the two step when you are high in the RPM as the engine must slow down to that set speed to turn the ignition back on. This will fill the cylinders with fuel and ignite them all when it turns back on. All the fuel will be in your exhaust and will lite off with a pretty large bang when this happens. The two step should be used on launching with the clutch and during shifting, I would use the fuel cut limiter if you are pegged at WOT and stabbing the clutch. In this case, you could hook up a switch to the clutch activation wire and turn it off as soon as you start moving. The fuel cut is the safest to use, but slightly slower than the coils (the fuel takes 10-15ms to turn back on while the spark only takes about 2-4ms). It is most commonly used in drag racing because of the extremely quick reaction time needed to launch. In autocross, the timer doesn't start until you cross the line and there is not much reaction time involved. Some pro events use a tree to launch, but most of the other guys are so slow on the tree, with a little practice, you can leave almost a second ahead of them (I used to drag race, road race and auto-x).