We propose a simple cut-set analysis based method that estimates the capacity bounds of optical networks. The method relies on investigating the wavelength utilization of the cut-sets that are likely to be heavily utilized, so it is simple and efficient. A novel cut-set load aware routing and wavelength assignment algorithm is then proposed. Numerical simulations elucidate that the performance of a conventional heuristics, k-shortest path first-fit, often used as a benchmarking alternative, is quite poor. Moreover, the further capacity improvement over the proposed method is limited to just 5-15%. Hence, even if we use a sophisticated algorithm for network design and control, the capacity improvement over best-performing heuristics approaches the capacity bounds.