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They're will definitely be some cuts coming down the line. I don't think it'll be of the size and scope that you've laid out in your OP but there will definitely be a few who don't make the cut.
The issue the WWE has at the moment is that they have hours and hours of TV to fill, plus a whole network that they are trying to fill with original content - the point being that they need as much talent as they possibly can get to accomplish that. Moreover, when you start taking people away, it makes rosters look pretty depleted. The tag team divisions on both shows, in particular, need a lift. Letting people won't do that unless you intend to replace those people.
That said, there are definitely a few people who are stealing a wage at this point. Curt Hawkins, Alicia Fox and Dana Brooke are three names who do spring to mind. Jason Jordan might be another one who is going to have to retire. Honestly, the WWE don't have a massive roster, given how much time they're trying to fill. I'm struggling to think of any more that would go.
You're probably right. I don't watch 205 Live, so I couldn't tell you who's doing well and who isn't. That said, it's just more prrof that the WWE has lots of content of fill and needs the superstars to do it. The good thing about the Cruiserweights are that they are very malleable and can turn up anywhere. Jack Gallagher, for example, could easily turn up on Raw or NXT UK.What about the cruiserweight division? They only appear on WWE 205 Live and WWE Main Event.