How can we cut a circular shape out of an isometric grid? I've tried using Path tools like Difference but they have no effect. Ideas?

the grid does not actually exist as an object, think of it as a background picture with benefits (snapping)
if you want a circle filled with an isometric grid there are a couple of ways to accomplish this, pattern fill and clipping.
LMK if that is indeed what you want

Clipping is working very well, thank you so much.