The laws of butterology demand that the butter must hit the ground, and the equally strict laws of feline aerodynamics demand that the cat can not smash its furry back. If the combined construct were to land, nature would have no way to resolve this paradox. Therefore it simply does not fall.
This is the secret of antigravity! A buttered cat will, when released, quickly move to a height where the forces of cat-twisting and butter repulsion are in equilibrium. This equilibrium point can be modified by scraping off some of the butter, providing lift, or removing some of the cat’s limbs, allowing descent.
The other thing to keep in mind is that you’d have to be careful where the cat is dropped…in the northern hemisphere, the spinning cat would, of course, spin in a counterclockwise direction, ala hurricanes and toilet bowls. South of the equator, the reverse would be true. A regulatory commission would have to be established to prevent mean spirited people from dropping buttered cats ON the equator, which would cause them to spin both ways at once, either turning them inside out or making them politicians.