He's entitled to stop a fight if the fighter is "unable to continue." But it is considered by the commission (and should be) very unseemly to stop the fight due to a cut without consulting the physician.
Of course, Mazzagatti didn't stop the fight because of the cut (which was caused by the elbow).
He stopped the fight because of Hamill stated that he could no longer continue (because of his arm, which was absolutely not caused by the elbow).
Mazzagatti was perfectly within his power to stop the fight. I'm glad he stopped the fight.
However, he's not entitled to declare the fight a DQ win for Matt Hamill without a justification that the injury which ended the fight was caused by an illegal strike (which it clearly wasn't).
I'm annoyed with this, because I've already made this argument in a handful of individual posts on this thread (as well as in the initial article) and you clearly didn't read it before commenting.
In a show with the level of scrutiny that the UFC receives you are correct, it would be very irregular to stop a fight due to a cut without consulting a physician. In smaller shows it happens fairly frequently, particularly for amateur fights. If a cut is inside the orbital socket, against the lines of the face you KNOW that fight needs to be stopped. You DON'T need a doctor to make that call.