Dan, I used to undercut the backer when I first started, but for the past dozen years I cut just inside the the line I've traced around the Intarsia. I think it's a matter preference and to me it doesn't look that bad to see the backer's edge from the front side and looking at the Intarsia, from the back side, I think it looks more finished.
I also used to paint the whole backer edge dark brown, which I no longer do and it hasn't made a difference as far as people wanting them. You have to get pretty close to even see the back edge of the Intarsia.
I don't think there is any right or wrong way, it's whatever pleases you.