Cuadrado is better when he does not have the ball. We have to adapt the team away from him a little bit. And we have to encourage him to move away from his comfort zone which is to drift into space and stand still until he gets the ball, at which point he initiates a dribble against 4 players.
That moment when he ran the line like a train and Khedira put the ball over the top is the exact way to use Cuadrado. Let him move towards the net without the ball and put the ball there for him at the end.
It's a more effective tactic to have Pogba, Marchisio, Dybala or Morata with the ball and use Cuadrado more as a classical winger IMO. Trying to dribble through Italian defences will never work.
If he even just makes off ball runs like Lichtsteiner he will be more effective. Since obviously he can cross, shoot and dribble better at the conclusion.
I think it depends on where the space is.
If a defence has squeezed up then it is harder to get the ball to his feet and so he should attack the space left behind the defence, as you say.
If the defence is deeper, you want to work the ball to Cuadrado in a situation where he is one-on-one with a defender so that he has a good chance of beating him and getting a cross in from a dangerous position. With the defence deep, that's most likely to happen with Cuadrado in an orthodox wide position - or possibly a little deeper so he can build up some space before the defender gets to him.
Either way, there's always a way to use him to hurt teams.
And if a team is sufficiently concerned about him to take him out of the game, that probably means they are leaving space somewhere else that Juve should be able to exploit.