First, let me start by saying that we got it working.

 

1.  \myapplicationname

2.  As an application.

3.  I have already stated this many times above.

4.  If I hadn't, the CuteEditor would not be working on the Development server. c:\inetpub\wwwroot\myapplicationname\bin

5.  They are in two places.

    c:\inetpub\wwwroot\myapplicationname\cutesoft_client\cuteeditor

    c:\inetpub\wwwroot\portalservices\myapplicationname\cutesoft_client\cuteeditor

 

As it turns out, why my "trick" didn't work was because the CuteEditor control was attempting to pass a contenttype of "application/xml" which triggered one of our layers of security as a malformed response/request object. After a little Googling, while "application/xml" is not recommended (noted as too generic), it is not illegal.  We created the exception in the security layer in order to allow the transmission, and eureka!