Can this be used for cutting dados & grooves utilizing the track?

We would not recommend the LR 32 system for trying to rout dadoes. The way it works, there is a mechanism that drops into the holes on the guide rail. So, you would need to override that completely or click it to proceed every time you got to one.The better options would be the guide stop, made to attach your Festool router to a guide rail for the purposes of dadoes, grooves, inlays, etc. Or, you could also use the parallel guides if you were working close enough to the edge of the lumber.You can check out these options using the link below.http://www.festoolproducts.com/accessories/routers/router-guides.html