To do the cut I put the beginning of the tag code in the "before" text on loudtwitter, e.g. '<lj-tag text="blah blah">' and the end of the code in the "after" text, '</lj-cut>'.
To add tags and an icon I make sure that I post using email and not atom and then use the LJ email tagging, security and icon, etc., code (in the LJ FAQ).
I am happy to share/pass-forwards the secret incantations because they were shared with me by another LJ user and the LJ Help section, respectively! Hope that helps!
So, thank you to jhazen for asking the question - I had no idea that so many people that I don't read read me! I had been meaning to make a post like this because a few of you use both Twitter and LoudTwitter now...