The cut wires are for unused speaker outputs (violet is right rear, light green is left rear) and power antenna (blue). Mine has the same. They cut them off to prevent them shorting to each other, and they don't expect anyone to add speakers or a power antenna. If you were upgrading speakers, you'd probably get rid of this basic head unit too.
I have the same unit, and mine seems to work fine. The USB input is not for an iPod/iPhone though - it's supposed to be for a USB thumb drive with MP3's on it. It's hard to navigate though, because it's a bare-bones directory listing of everything on the drive. For my iPhone, I use the Bluetooth feature, and that works great. I hooked up my TV to the AUX input on the back, and I use the front input for my Sirius radio.
2016 Coachmen Freedom Express 282BHDS
2008 Dodge Ram 1500 Quad Cab 4x4 Big Horn, 5.7L HEMI