Yes, I tried it without B-Frames and VirtualDub will cut an AVI on a non keyframe, as long as everything from the cut point to a later keyframe is removed (or from the cut point to the end).
A quick test with MKVToolNix indicates it sticks to splitting on keyframes but it's not really an editor and I guess the assumption is all the segments should be playable.
Still, cutting on any frame that way would require disabling B-frames or using the zero latency option, and the OP didn't indicate he was doing either.
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