I think I've figured it out.
Not sure if anyone is still following this thread, but I think I've figured out the color interaction between Illustrator and LaserCut 5.3. I'm using CS2, but I think as long as you save as Illustrator 8 any contemporary Illustrator should behave the same.
First, it seems to only remember colors when the document is CMYK. LaserCut doesn't seem to respect colors if the document is RGB.
Second, LaserCut's colors are RGB, but it will find nearby CMYK colors in the illustrator document.
Third, here's the rub. If you set the colors according to the LaserCut palate, they will get translated to CMYK by illustrator and back to RGB by LaserCut. In short each color goes through RGB -> CMYK -> RGB. Unfortunately some of LaserCut's colors are too close together so the map to the same RGB color. That's probably why people have reported having 5 colors in illustrator and only 3 when imported to LaserCut.
My advice (this is the way I work) if you are not using too many layers stick to primary and secondary colors as the are "far apart" avoid colors that are shades of each other. If you need a lot of layers, I'd go through the exercise of painting a test illustrator file with objects in each of the LaserCut colors in its palate. Then, import it and hide each layer. When two objects appear in a layer, then the colors are two close together. Keep only one of those colors in your "LaserCut" illustrator swatch library. I was able to pull about 18 distinct colors.
I've had inconsistency in the order they are imported, so sometimes it is hard for me to distinguish the 18 colors and sort them correctly. But I think you can easily come up with a palate of 10 easy to use colors. With a small investment in time to get your "working palate" you can greatly speed up your workflow.
This insight has drastically sped up my workflow at the laser. Basically I can import my file, set my speed and power and cut order.
Hope this helps you all.