Normally on  a plotter you cant cut " pictures" because they are seen as a flattened image ( jpeg, Bitmap etc) and the machine cannot recognise the lines. 99% of plotters require vector files. The fonts on your computer are vectors and their outlines are seen by the comp as a mathematical composition. Often when you send a file to another person with a cutter and they don't have the font, they cant cut it - you have to convert to curves which gives a mathematical outline to the lettering ( or they install the font as TFF).
Red Eye works in a way that a print ( normally with registration marks) can be cut to nominated lines on it so long as they are clear and precise... it reads the line in other words. It how we can produce a digital print and then cut it on the  plotter once ink has cured and the print is fed back through... you nominate the line to cut to and the comp cuts out precicely