When trying to cut from a vert to any other edge/vert, for some reason max is like tracing along the existing edges and cutting from the nearest vert, instead of the vert I clicked on. What have I accidentally pressed, and how do I change it back please :|
max 2010 32-bit

I think it has a lot to do with the scale of the scene, and the 3D snap settings.
Right click the little 3 magnet, go to the options tab, and adjust the General settings.

You can also use the slice plane to get a good horizontal cut without it snapping to the edge.

Also, the cut tool sometimes has issues if you are in perspective view. If it's being a real bitch, try the same thing in user view.

Cut tool is iffy. Like Vig says, enable 3d snap - I keep it on snapping to vertices if that's what I'm cutting between (also avoids creating unwanted verts aaalmost at the target vert). Sometimes (read: every other time) you have to change around how you cut, like going from where you intended to go and cut backwards. That and welding like a freak when you think you're done ;)

Looks like a scene scale issue, which is seriously weird because some of the objects in the scene are like 500+ units apart (fps weapon model) and yet when I do an edge chamfer of literally 0.001 its still pretty damn huge. Its like some of the scale is off, but some isnt? Quite bizarre. I'm gonna try export->import the cage meshes into a new scene and see if that fixes it. Will post if I work out what the problem is.

Objects have an over all scale transform history. So for example if you created a giant cube that object down 5000% it will attempt to apply certain operations with that scale in mind. You can reset it, telling it to use the current size as 100% (Hierarchy tab > Reset > Transform & Scale).
Or if you don't care about the pivot point or the modifier stack do a reset xform and collapse the stack.

To get around this in the future scale in sub-object mode (element, poly, edge vert) not in object mode.

Or it could be that you're working really really small?
Hopefully there isn't anything keeping you from scaling it up? You could always scale it back down, reset scale and export if that's an issue.

You could try adjusting the scene unit scale (Customize > Unit Setup). I normally start out with a measuring stick thats 6 ft high in unreal and source. It comes in real handy for roughing in scale.

Maybe using some kind of marker that you don't scale up. You size it to your object and that way you can shrink it back to that size when you're done. Maybe just copy a piece of it you know won't change.

Or use the objects scale itself.
Reset transform, the type in corridors box should now read 100.
Scale it up so its easier to work on (do not reset the scale or xform while working)
When you're done select the scale tool, type in 100 and it shrinks back down to the right size.
Before you export reset scale or xform.

Old as dirt, but still works in max 2010: http://www.scriptspot.com/rhyde/cleancut.html