IMHO, there isn't any good way to automate the creation of cut lines.
Automatically Live Tracing around a pixel-based image will yield a quick and dirty path -a path that is likely to have issues that cause the plotter blade to literally chew up the vinyl. Cut paths need to be clean. Not only so they cut cleanly, but also to make the graphics easier to weed. A live-traced path would need to be edited to remove the tiny kinks, bends, stair-steps and little overlaps that almost always occur in auto-traced paths. It's either that or the path would need to be hand-drawn using tools like the Pen Tool. Obviously creating clean cut paths from vector-based artwork is much faster/easier.
Be careful about making cut paths too intricate and detailed, especially if the graphics are small in size. The cut graphics still have to be manually weeded before being covered with release tape. If the cut details are too intricate and delicate weeding accidents will be much more likely. It also raises the risk that small portions of applied graphics will tear off the final surface when the release tape is removed.
If you don't already have a user defined spot color swatch for CutContour it's easy to create and re-use.
Are you printing/cutting large quantities of the same graphic or nesting lots of different designs together?
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