There is little doubt the Isuzu engine isn't tuned anywhere near it potential. However, the fuel cut IS NOT 'the ECU telling me that I can't control a bit of wheel spin!' rather an inbuilt protection mechanism to avoid damage to the engine.
The fuel cut occurs at the point the fuel system can no longer deliver enough fuel to hold the required air/fuel ratio. If you go North of 1 bar of boost with the stock fuel system you will run leaner than target and you will get pre-ignition. Engine speed and injector flow rate are the limiting factors. At 2000RPM the fuel injector has 60ms to inject the fuel required for the next combustion stroke at 6000rpm it has 20ms. The fuel injectors flow at 320cc/min so the fuel system has a fixed limit on how fuel it can deliver at a given engine speed. You can fuel for 1bar at 4500rpm but not at 6000rpm. You can't fuel for more than 1bar of boost at any revs because the standard MAP sensor can't read beyond that level and so it can't know how much fuel to inject.
In FCD equipped cars the 'lean problem' is made worse by the fact that the MAP sensor reading is clipped at a level well below 0.9bar never mind 1bar (usually 0.7-0.8bar). So when the ECU is only trying to fuel for, say, 0.8bar and the boost is actually 1.4bar (it has happened) - that gives a mixture of 13.6:1 - ask anyone who knows anything at all about engines if that's a good mixture to run at 1.4 bar of boost.
The ECU will retard the ignition when the knock is detected and that is what I think has saved a lot of FCD equipped cars. That means you are one sensor failure away from a blown engine - sounds a lot like Russian roulette although whatever the outcome, you should be around to survey the damage. Do it enough and it'll probably melt stuff anyway.
Inadvertent increase (usually due to wastegate stuck shut)
It is a fact that people who get the 1+bar boost at very lean fuelling levels (stuck wastegate & no fuel cut) report a lot of power but it will compromise engine life. Anything you do to exceed 1bar of boost that doesn't address the fuelling goes into my book as a bodge that has the potential to pop your engine. You need a 3bar MAP sensor, higher flow injectors and a new control system mapped to deliver the appropriate levels of fuel. Nitrous is worth considering (that'll need extra fuelling too though).
The V3 & V4 chips increase power simply through increasing boost via the standard boost control system (the ECU in conjunction with the boost control frequency valve - BCFV). The chips also improve boost delivery by modifying the parameters of the boost control routine in the ECU.
At high boost the ECU (as standard and in the upgrades) makes the air/fuel mixture richer in order to cool the charge and inhibit knock. The level of enrichment in the standard Elan is very high. This provides a useful safety margin that has probably saved more than one engine from detonation when low tech boost upgrades (particularly those which modify the output from the manifold pressure sensor to prevent fuel cut) were used. However, in the V5 chip the fuel enrichment has been optimised to give optimum power without knock. This has improved the power output but reduced the safety margin so these are available with a switcher so that a less aggressive program can be selected if required.