Readers of Book of Lies from Disinfo.com will be aware of the 'cut-up' technique created by Brion Gysin. This technique was also used by David Bowie and no doubt many others for various purposes since.

"...while cutting out a mount for a drawing in room no.25; I sliced through a pile of old newspapers ...and thought of what I had said to Burroughs some six months earlier about turning painting into writing. I picked up the raw words and began to piece together texts which later appeared as the cut-ups in Minutes to Go." - Book of Lies, page 93.

"The cut-up technique was originally devised by the Surrealists, and most famously used in literature by William Burroughs: you take a text, cut it into pieces, reassemble these pieces haphazardly, and thus create something new.
Because Bowie used the cut-up technique to 'write' many of his lyrics there is not much sense in trying to analyse them as a whole or each lyric individually word by word: instead one has to focus on the recurring images and codes that appear in the entire "David Bowie" 'opus', which connote his kind of gnosticism. Bowie defined his use of the cut-up method as his way of discovering his own past and future. He himself became a cut-up himself too - at least for those who followed his career closely throug the years - these followers were (and still are) confronted by reflections of themselves in the splintered facettes that make up Bowie's often odd-sounding lyrics; in Bowie's ever-changing styles of fashion images; in Bowie's constant name-dropping of keywords of books whenever a micro or a pencil of a journalist was and is at hand. It's probably also worth pointing out that he talks in fractals." - The laughing Gnostic: David Bowie and the Occult.

This seems to be a potent magickal technique that is still very much in use today. Apart from cutting up and mixing magickal texts together to form rituals, and using this for divination as well, does anyone have any ideas/thoughts on this? I know the IOI mix cut-ups from magickal and non-magickal texts to create rituals but do any other groups?

It would seem an ideal tool for the chaos mage. Mix up bits from various texts (necronomicon, oven ready chaos, winnie the pooh) to create something that crosses the boundaries of chaos, ceremonial and poetry to become something greater than the sum of its parts. The very expression of our non-dogmatic approach to magick, using the essential chaotic nature of the random process, to go from order to chaos to reorder.