During the FSR and fragmentation, 4-momenta of the relevant final state particles are slightly changed in order to keep the energy-momentum conservation. In the GRAPE-Dilepton generator, lepton four-momenta are affected by the FSR from a scattered quark in the DIS process.
The mass cut is actually applied to four-momenta of the final state particles before the FSR and fragmentation, which are stored in the lines of and above the 10th line of /PYJETS/.
The difference becomes more significant in the DIS process because there
are QCD radiations in the final state in addition to QED ones.
If you set the following cards to turn off the FSR and fragmentation,
C << PYTHIA parameters >>
you can see no events with a mass below the cut value.