Hi Tony, nice to see you here.
The tsuba on a shinken serves a couple of purposes. It does protect the hands. If a blade comes sliding down, it will be stopped at best, bounced away at worst, by the tsuba. It also provides protection in tsuba zeriai, when people have moved in tight and are working tsuba to tsuba. Most importantly I think is that if you thrust hard (and why would you be thrusting any other way?), and you run into something hard that makes the sword stop suddenly, the tsuba keeps your hands from sliding forward over the blade and neatly slicing your fingers off.
On a bokuto it does a wonderful job of protecting your fingers from strikes. It's not a perfect job, but I'd hate to do a lot of the MJER tachi uchi no kurai and tsumei ai no kurai without one, and Itto-ryu is even worse. I don't even want to contemplate Shinto Muso Ryu's Hikiotoshi Uchi without out a tsuba. It also makes you aware of the dimensions and properties of a shinken, so you will be more likely to treat it like a proper sword.
As for shinken having long tsuka (hilts), the only ones with really long tsuka are the ones Bugei sells. Oddly, I've never seen swords mounted like that in Japan. The standard tsuka lenght is 9 sun (roughly 11 inches/27 cm). A tsuka of 1 shaku (12 in/30 cm) is exceptionally long, though I have sold a couple to people with really large handes.
I'm not a fan of the little plastic tsuba, a couple of shots of hikiotoshi uchi and they crack and go blasting right off the bokuto and the jo does a nice job on your hand. I prefer the boiled leather tsuba which are traditionally used by Shinto Muso Ryu and Itto Ryu, among others.
I agree with Tony that aiki-ken isn't good swordsmanship, though it can be good aikido. But even if we are practicing to get off the line and take control of the center (nothing particularly special about doing that in aikido by the way, that's a standard operating procedure in every style I've seen), we're not perfect, and a little protection goes a long way if it's the difference between being out for 6 weeks with broken fingers and being out for 15 minutes with a nasty bruise.