Welcome to the forums!! Glad to have you!!
OK...to the cake stuff.... have you tried working a little shortening into the fondant as you are kneading it? I think that helps to keep it from getting too dry.
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I don't do a whole lot of fondant covered cakes, but I've never had a problem with it bring dry and brittle.
As for the cutting.....If they start with the tip of the knife going into the fondant and then bringing the end of the knife down into the fondant so that it's even with the tip before they start cutting the cake it will go just fine! (did that make any sense?

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I wouldn't worry about taking the fondant off the cake when serving. Some people really like it, so let them choose for themselves if they would rather et it or peel it off.
Good luck with it! I hope it goes well for you!
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