What car/engine?
What sort of ignition system is in the car?
Is it single coil with a distributor, or individual coils per cylinder?
Knocking out spark to a single coil is pretty rough. . it gives the rev limiter very harsh operation.
Racing ignitions will generally alternate which cylinder they drop, and then make sure that cylinder is fired on the next compression stroke so as not to load up that cylinder with fuel.
The difference is night and day with a digital MSD style ignition limiter to an older 6AL style analog box.
I've run both (in an 8 second carby car) and the digital one is so much smoother, sounds a lot nicer on the engine then the older style.
Fuel cut rev limiting in a boosted application probably doesn't sound great to me either (unless it's a diesel), as it's going to cause a very lean-burn situation in the cylinder it's dropping fuel to (assuming fuel injected?).
Maybe there's an aftermarket option for the computer in your car to allow different RPM limits (for your 2/3 step)?