^ Can anyone tell me what that is hanging?

 

Looks like somthing to hold the exhaust if it falls off. I guess. When in doubt take it out. lol

 

Doesn't look like anything in the part manual diagram. Maybe it was for attaching one of those grounding straps that dragged on the ground/road to discharge those nasty electrical charges that zap you when you touch the car in low-humidity conditions. They were a big thing years ago.

 

looks like a stock grounding strap.

They connect the exhaust to the chassis so the O2 sensor and stuff work better/accurately.

 

Should I just cut it off?

 

it is a ground. I asked the doctor the same exact thing last time I was under my car.

 

yep its a ground, if your cars running fine now cutitng it wont make any difference.

 

It is a ground wire for the exhaust and should be replaced and re-attached to the exhaust pipe.

Japanese grounds are already weak from the factory... cutting one off because it is dangling would not be the smartest advice.

 

Its a raccon

 

What's a "raccon"?
http://dictionary.reference.com/search?q=raccon


-Ted