I'm confused. 'cut' works just fine for me in the Windows Terminal:
-------
> echo $SHELL
/bin/bash
> echo "foo bar" | cut -f 1 -d ' '
foo
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I'm using the WSL Ubuntu bash. Could your problem be with this 'msys' you're using?
(I'm not sure what the 'dircolors' SHELL env var is--I haven't used 'dircolors', but 'man' tells me it's a program that sets the LS_COLORS env var, not an env var itself. And it says it has a shell type option, although that seems to be limited to C-shell and Bourne shell. Or maybe you mean dircolors doesn't pay attention to the SHELL env var? Again, that sounds more like a problem with the msys bash implementation, rather than the Windows Terminal.)
(I'm not sure what the 'dircolors' SHELL env var is--I haven't used 'dircolors', but 'man' tells me it's a program that sets the LS_COLORS env var, not an env var itself. And it says it has a shell type option, although that seems to be limited to C-shell and Bourne shell. Or maybe you mean dircolors doesn't pay attention to the SHELL env var? Again, that sounds more like a problem with the msys bash implementation, rather than the Windows Terminal.)