Following this on my phone is hard, now I understand what you're getting at. Working out Peg 1 in the cutting and Peg 1 out side....would only work if you are playing the cutting as 3D, ie terrain with actual physical on the table depth. I was working on the assumption that the playing area would be flat, so any aircraft at peg 1 or 2 would be in the trench/cutting those at 3 or 4 outside.
An aircraft could not be at Peg height 1 or 2 and be outside the cutting/trench line.
An aircraft at 3 or 4 could not be inside the 'walls' of the cutting.
For game purposes peg height 1 and 2 are for in the cutting only.
AA guns and MG's can fire at 1,2,3 or 4 peg height without restriction other than 2 rulers length away. (Of course depending on where the gun is situated, in or out of the trench/cutting)
I should have stated no firing into the Trench/cutting by aircraft unless flying along the line of the trench/cutting.
But as always rules or house rules are not cast in stone. Play this anyway you see fit as long as you enjoy the scenario, or not as the case may be.
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