Torpedos intended to destroy surface ships normally use a depth keeping sytem to go under the spine, to break its back. Magnetic or hydrostatic fuses are used.
Torpedos intended to destroy subs used to be magnetic fuse with a backup impact fuse, and the depth keeping system was not used because you can't depend on a sub to be a particular depth. Either type of fuse would detonate outside the vessel and would petal the metal inwards, unless the metal was brittle, in which case it would fracture roughly.
The abrasive cutting system would make nice neat holes. Sounds good to me. Even the explosive cutters used for ejection seats leave a rough hole.