As you yourself conclude, the main issue is that many of these things are defined as percentage of view width, while the actual preview window is a fixed size, so this can happen with extremely large maps like this.

So in short, nothing is broken, just a view issue.

You can actually change the size of the preview windows, if you hit that advanced button in the drawing tool window, you'll have access to the sample width setting, which is the size of the preview, just bump this up a few notches. Do note that this is a per-tool setting.

At this stage, the bitmaps may look more pixelated than desired too, so you may wish to use :CC2RESMODE: to force a higher resolution for the display (Note that this can affect performance)

Does it get better if you hide the grid? The grid shouldn't normally interfere, unless it is on the wrong layer, but turning it off is a good test.

Are your walls on the right layer? The cutting feature uses the layer to identify the entity type so that it doesn't cut the floor instead. The walls have to be on the WALLS layer for the cutting to work.

Also, it is an advantage to turn off snap when working with the cutting symbols, especially if you are trying to hit angled walls or walls not exactly on the snap grid.

I've got UNION ready, but haven't gotten to DIFFERENCE yet.

If they are partially overlapping, the simplest way to merge them is with the TRACED command. This will create a new poly, so delete the other two afterwards, and change properties on the new one if required.

The link below shows how to use TRACED. The example uses a single bitmap image, but it works just as well on a set of polys.