Cutting Hand (SC, p.57) changes your hand so that it does more damage and has a +2 enhancement bonus, but he enhancement bonus does not apply to touch attacks.
My question is this: When grappling, would a successful grapple check for damage result in doing the standard unarmed damage for a creature of your size, or would you do damage based on Cutting Hand's new amount? I believe that it does not alter your unarmed damage, but instead you could choose to attack with the hand per the rules in grappling regarding light and natural weapons instead of choosing to do damage from the grapple.