It sounds like you ended up with a goopy mess. Please remember that the Eco-Flo products are water based so I would not suggest 'thinner.' If you want to do it right, I would suggest Tony Laier's Eco-Flo dyeing book that is sold at Tandy. If you use the Fiebings dyes, they also have their own book on using their products. You can use their regular color dye for the work you want to accomplish, but be sure to use a good sealant or all of your work will go to waste after one use on your hard working boots.
Winterbear is correct. When cutting points and some other areas on your project that will receive a lot of stress like corners or points (feathers) you do not want to have your cut points meet. You want to make sure to stop short. This is also the same for crossing lines. The leather "may" lift with repeated use and weakening the leather over time. Chances are that your tooling will not stop with just the cutting, so something like beveling will join that corner and it will most likely look no different.
On your undercutting, just try your best to keep your saddle (where your finger rests) pointing up. Try not to allow the saddle & barrel sway from side to side. The finger on your saddle applies direct pressure downward and your thumb and middle finger just guide and rotate your barrel. If you have the feeling like your knife is dragging, you might want to strop it and/or sharpen the blade.
I am not a figure carver or great dyer. I always practice with my swivel knife on a piece of leather before I start a piece and many times in between projects. Simple circles and turns plus stop and starts are good exercises.
As always, thanks for posting a picture......it looks great. Keep up your practice!