That's a pretty big, heavy engine for a 26 foot boat and when you're pushing hard the boat will "squat" quite a bit, lowering your apparent freeboard accordingly.
I don't think it (the cut-out) would be a problem in following seas unless you were motoring hard downwind at the same time... presumably if it's that rough you'd do better sailing anyway.
A lighter motor will help, but of course you're unlikely to want to go that route.
I'd experiment with the throttle settings, and see exactly how much speed you actually lose as you back the throttle off a bit, as opposed to how much you reduce the "squat" at the same time. There's usually not much point in over-driving a displacement hull for the little speed gain you may get. You really just make bigger waves and use more
fuel...