CHR,
At the 110% ME Tq limit the fuel flow will be "restricted" not cut off, it basically causes the TQ to sit at 110% on the affected engines, and prevents any further TQ being delivered, with a resulting RPM Droop.
The Overspeed "Cutoff" is a bit of a blunt instrument, it doesn't stop the engines, it cuts the fuel using a solenoid in the FMM (from memory), that causes the N2 to fall, once it falls below a threshold value it is free to try and Overspeed again, if the load on the engine has not changed.
Never heard of an issue with 7% Tq being mentioned, I can only assume that is someone's rule of thumb to prevent NR overspeed due to keeping N2 and NR "matched" by always having some Torque applied.
It's fairly easy to overspeed (within transient limits) NR on the S and SP, with brusque manoeuvring when you first start to fly them, the Rotor head is more aerodynamic than the E model and it can come as a bit of a surprise, NR goes up quick, but it also comes down fairly quickly, even with my meagre skills.