I once had to do this sort of a demonstration at a university, although I had the advantage of doing it with a 3rd Dan sensei. I don't know about your University's sports fair, but our demonstration only had to be about three minutes long. So we did a quick talk on what Ki is (unbendable arm, etc.), then talked about how it works in Aikido, and the whole using your opponent's energy bit, and how it helps in everyday life with your attitude and so on. Then we only did about thirty seconds of actual demonstration, and then it was over.
I agree totally that you should do what you feel comfortable with and be honest about your ability. You might end up looking silly if you try to wow them more than you are able to. And definitely mention that you have an excellent teacher, because that's undoubtedly your best asset. I bet there will be a certain number of people who will be curious enough to come, and people with the right mindset.