[Robin Hewitt]

Now let's assume the above error occurred while cutting material with multiple passes ( caused by a knot in a piece of wood for example) ; both would have left a 'bump' of uncut material.

If you overload a stepper to the point where you lose steps everything thereafter is garbage. That's why us stepper people tend to drive them way below capacity. I have more than enough power to snap the tool but I try not to use it

With the scales attached, theoretically if it can't cut the material all 3 axes stop, possibly within 0.02 seconds depending on the tolerance. The repeating step pattern will cause it to back off and then try again and again until it succeeds, or not as the case may be.