When using cutback at KSNA, at 800agl, the engines roll back but the angle remains the same causing a buffet before stall and then stall correction. Maybe there needs to be a hard coded angle reduction that takes place at 800agl as in real life. Also take into account the 26k bump that is used. :Hypnotized:

Lower the nose; it's as simple as that. When the engines roll back, you need to adjust for the reduced thrust. There is already a hard code in the autopilot to pitch for airspeed under VNAV and FLC. But if you're still hand flying, its up to you. And actually, if you're only at 800AGL, you should be hand flying.

It is only when AP is engaged after 800agl that this happens. If I have to hand fly up to 3000agl, what is the point of using cutback at all?

With FMC 10.8 or later, like on NGX you may engage autopilot at 400AGL. I have used cutback with autopilot and it works great.

I engage at 400agl. It cuts back at 800agl. The nose tries to stay high and I get a buffet. The nose lowers slightly and then raises again and the buffet begins again etc. till 3000agl when the power comes back. I've tried different weight and trim configs, but always the same. BTW I'm using the 700 mostly, but it happens on the 800.

What pitch mode is engaged? You have to engage something like VNAV or FLC to get the correct commands. And especially in the B737, you can eaisily hand fly the plane through 3000AGL even in hard IMC if you set up the MCP correctly. Remember, the Autopilot is only as smart as you tell it to be.