A very interesting topic...
I think that if we agreed that with each generation we get further away from "THE SOURCE", i.e. that we can never be like it, i.e. we can never get to the same level of understanding --- what's the point in studying the art then?
Do we study Aikido (A) trying to understand our surroundings and the workings of nature (which includes interpersonal relations, which includes maybe fighting)?
Or do we study Aikido (B) year after year just trying to copy our teacher (which can always be a copy only, no original), who him/herself did nothing over the years but copy theirs? Does that imply that our current Shihan, who have studied under O-Sensei, did only copy his moves?
I think studying Aikido in the former fashion (A) IS INDEED studying AT the source, whereas (B) can easily be closer to "FROM the (human)source". I have to admit, though, that I see a risk, even when studying like (A), VERY few of us (not me at least) study Aikido to the extent O-Sensei did, not physically (i.e. x hours every day), nor off the mat (I do not yet enjoy having 24 hours a day time to study Aikido's principles/philosophy; I know, being at work can be a form of Aikido-practice...)
So martially speaking, there is a risk of dilution, but that stems IMO not from us being generations apart from O-Sensei, but us living a less martially-focused life.
I am still at a loss when asked what Aikido will hold for me personally in my life and how far I will be able to understand it, being at the beginning of it (if for no other reason)...
Have fun training (off the keyboard)!