How bad is it to hit the rev. limiter?

Hitting the limiter wont really hurt as long as you dont just RAIL on it at the limiter, if you just bump it by running a gear out too far it wont hurt but if you stand on the limiter all the time it will definitely do some damage. My old Talon had a pretty nasty setup on it and I would bump the limiter at 8200 all the time trying to inch people out at the end of a gear. I would also use the Two-step at 5800 with anti-lag with no ill effects, motor started with 180psi compression with 1000miles on it and ended with 180psi compression with over 20k miles on it. This was a spark-cut limiter which has been discussed above.
 
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There is nothing particularly wrong with a fuel cut rev limiter. A lean condition is bad, but a fuel cut rev limiter causes a NO fuel condition. That means no combustion, no lean condition... Just inert air in the cylinder. So no problem at all.

However, you don't want to hit a fuel cut rev limiter while spraying a wet shot or using meth/alky injection. In those situations, you still have fuel flowing from sources which the computer can not control and turn off.

And as others said, those 4 bangers you see at the track use a 2 step rev limiter. Setting the engine speed to around where boost comes in can allow you to launch with boost instead of waiting on the turbo to spool. I probably need one for my 2.3. :p

If not running nitrous or meth injection, I would rather have a fuel cut than a spark cut. In a spark cut, you still have fuel flowing, and raw fuel flowing through the exhaust. This could either cause a bad backfire, or rediculous EGT temperatures due to the fuel burning in the exhaust.