I made it for the Cut & Paste collection, and then I updated it today.
Nice! I like the symmetry of them cutting from each other, although it took me a little while to figure out both why and how you did that.
XOR operation
Sure, that was obvious just visually (especially moving over the lettering), but it's not obvious that mutual cutting would do an xor, rather than, say, (U-A)-B. The tricky part is that the code temporarily restores the full costume of the first cutee long enough to cut the other sprite.
I like it! These CUT and PASTE blocks are great for producing funny visual effects
lave it 
cut/paste blocks are the best blocks in snap imo
Update: Sprites are no longer draggable
I noticed that.(that it was draggable)