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For sharp exterior corners on thin material such as vinyl, there could be lifting of the material when the blade re-enters the path, causing bunching of material and a worse cut. What happens when cut paths are closer together than the oval cut - this will damage adjacent cut paths.
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What if the project is a negative image used as a stencil? Then the exterior material is good, and interior is waste. What about interior corners? - The oval loop will actually cut into the good material instead of waste area. However, consider several issues with this path shape: This would then cut a small oval/pie shaped piece in the "waste" area of material and theoretically cut a sharper corner. You propose the tip of the tool should go beyond the cut corner, form a loop, then restart cutting on the path.
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