[step:Handle cuts where the cut formula is introduced in both premises]
Assume first that the last inference of $\mathcal{D}_1$ introduces the cut formula $C$ on the right and the last inference of $\mathcal{D}_2$ introduces that same occurrence of $C$ on the left. We replace the cut on $C$ by one or more cuts on proper subformulas of $C$.
If $C = B \land D$, then $\mathcal{D}_1$ ends with $\land R$:
\begin{align*}
\frac{\Gamma \vdash B \qquad \Gamma \vdash D}{\Gamma \vdash B \land D}.
\end{align*}
The left introduction in $\mathcal{D}_2$ is either
\begin{align*}
\frac{\Delta, B, \Pi \vdash A}{\Delta, B \land D, \Pi \vdash A}
\end{align*}
or
\begin{align*}
\frac{\Delta, D, \Pi \vdash A}{\Delta, B \land D, \Pi \vdash A}.
\end{align*}
In the first case, the induction hypothesis applied to the proper subformula $B$ gives a cut-free derivation of $\Delta, \Gamma, \Pi \vdash A$. In the second case, the induction hypothesis applied to the proper subformula $D$ gives the same conclusion.
If $C = B \lor D$, then $\mathcal{D}_1$ ends with either $\lor R_1$ or $\lor R_2$. In the first case it has premise $\Gamma \vdash B$, and $\mathcal{D}_2$ has the form
\begin{align*}
\frac{\Delta, B, \Pi \vdash A \qquad \Delta, D, \Pi \vdash A}{\Delta, B \lor D, \Pi \vdash A}.
\end{align*}
Applying the induction hypothesis to the cut formula $B$ and to the derivations of $\Gamma \vdash B$ and $\Delta, B, \Pi \vdash A$ gives a cut-free derivation of $\Delta, \Gamma, \Pi \vdash A$. The case where $\mathcal{D}_1$ ends with $\lor R_2$ is identical with $D$ in place of $B$.
If $C = B \to D$, then $\mathcal{D}_1$ ends with $\to R$ and has a cut-free premise
\begin{align*}
\mathcal{E}_1:\Gamma, B \vdash D.
\end{align*}
The derivation $\mathcal{D}_2$ ends with $\to L$ and has cut-free premises
\begin{align*}
\mathcal{E}_2&:\Sigma \vdash B, \\
\mathcal{E}_3&:\Delta, D, \Pi \vdash A,
\end{align*}
with conclusion $\Delta, \Sigma, B \to D, \Pi \vdash A$, up to exchange. First apply the induction hypothesis to the cut formula $B$ using $\mathcal{E}_2$ and $\mathcal{E}_1$; since $|B| < |B \to D|$, this gives a cut-free derivation
\begin{align*}
\mathcal{F}_1:\Gamma, \Sigma \vdash D.
\end{align*}
Then apply the induction hypothesis to the cut formula $D$ using $\mathcal{F}_1$ and $\mathcal{E}_3$; since $|D| < |B \to D|$, this gives a cut-free derivation of $\Delta, \Gamma, \Sigma, \Pi \vdash A$. Exchange restores the required order of the context.
There is no principal-principal case for $C = \bot$, since $\bot$ has no right introduction rule in $\mathsf{LJ}_{\mathrm{prop}}$.
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