You can't keep the fuel and spark cut active indefinitely, this would stall the motor. The engine cut mechanism in the E38 allows for prolonged use of the clutch pedal without causing the motor to stall. For the purposes of a sequential gear change, I think it would be fine as the re-application of power is not a sudden burst. The spark is ramped back in progressively. I'm not sure if multiple triggers would help, it may, but it would need to occur in the time a normal shift would occur. I'd estimate that a shift should be over within 150mS to 500mS. If you look at the log I added, I was shifting between 225ms and 300ms, that was from clutch in to clutch out. So if the up shift event was to last longer than 500mS, there would be a problem.
In the event of a missed gear, I doubt any race driver would want the GT to hold the engine cut on and risk a stalled motor. Instead they would probably know bout the missed gear in a very short period of time and reacted to the event. The E38 has a very good RPM limiter which will prevent over revving damage, so the driver can, if need be, resort back to manually clutching the gear change. What I would do is to test the GT setup and see what sort of time it takes for the shifts to occur, then tune the CFCO setting around these times. I would have this as part of my normal race preparation to ensure the shift speeds are catered for over the life of the gearbox. If a gear is missed for some reason in a race, it's then just a case of returning to manually changing, knowing the GT system cannot completely kill the motor.
The idea of pulsing the signal may work but as you say, it needs testing. It would be fairly easy to try, just need a "555 timer" to switch the clutch pedal signal with say, a 5mS (200HZ) square wave. This in theory would repeat the spark and fuel cut until the engine RPM dropped to the CFCO min RPM speed at which point it would just act like a very low RPM rev limiter. Let me see if I can work something out.
A quick touch on the idea of cutting power to the coils. In the E38, this would probably throw a bunch of miss-fire codes in the ECM as it detects that the cylinders are not firing. It would also throw a lot of raw intake charge down the exhaust, which would be very spectacular the next time the engine fired and the exhaust hit the unburnt mixture. So I wouldn't want to go this way with the car, unless you want to use exhaust flames to deter people from overtaking.....
Simon