@Gri all objects till the sky are cutted out. Otherwhise extra rendering with extra views might be required. Because the entity with the cutoutshader still write to the ZBuffer. Disabling it would result in everything overlaying the entity-hole.

EDIT: The technique behind it is pretty simple(maybe not optimal). The cutting entity just draws its colors with alpha = 0 to a 32bit rendertarget while writing to the ZBuffer.
The final composed image is manually dran to the screen(draw_quad) to respect the alpha channel