"Will using one eliminate the 3 way switch? Thanks for any thoughts."
When you rev the engine and the generator output increases to a set point above batter voltage the cutout connects the battery to the generator. When you idle the engine and the generator output drops below battery voltage the cutout disconnects the battery.
The 3 way switch controls charge output. There is a resistor from field on generator to ground, this reduces generator charge and is low charge setting. For lights or high charge the switch shorts out the resistor, grounding the field and generator goes to high charge.