See attached screenshot "HoleCutterProblems.png" for what can happen.
Some of this may be related to the bug
UDIG-965. (Edit outlines and vertices drawn incorrectly.)
1. Sometimes all subsequent holes seem to get yellow edit lines to a certain point of an earlier drawn hole after being finished - but the white hole itself is drawn OK - at least for the moment. See "HoleCutterProblems2.png" for an example. I havn't yet found out exactly when this effect happens.
2. Draw a hole. After finishing it with a double click, do a second double click in the polygon (not in the hole) and then, quickly, a third one. Drawing a second hole will start at the latest location, but double click for finishing this hole will not work. I can often reproduce this at will.
3. A variation of this: Draw a hole. After double-clicking, quickly click a few times on other locations as if drawing a hole there. Often uDig gets confused and a lot of funny things happen when you try to continue cutting. You get yellow lines drawn somewhere else (HoleCutterProblems3.png) and double-clicking doesn't work any more. In this case press Esc to make uDig work reasonably again.
Note that while it is easier to preproduce the effects when clicking quickly, I originally encountered them during "normal" editing, i.e. not having done anything wicked.
Sorry, sending you a movie of it would show the effects mich better, but I hope you can reproduce them anyway.