Well to answer the original question, No, Saito has never had to answer in the form of a duel. Although conversely niether has anyone else for that matter, as largely most instructors are above "biggest kid on the block mentality" Now insofar as Osensei and the Kashima Ryu, Skoss is right, Osensei's name does appear on the schools scrolls, he paid for that right and had a Kashima practioner come to the kobukan and teach where Osensei, watched practice or had his son participate and show him later. This is not to dedgrade Osensei, put yourself in his shoes, a master in his own right having to take lessons from someone who a)may be good technically but by not being the head of the system is still somewhat ranked lower than Ueshiba and b) Someone as high ranking Skillwise would probably not be in the same "class" of students as the others studying the Kashima ryu at Kobukan.
Now Saito OTOH took what Osensei addressed and categorized them by his definions, although if you compare Iwama ryu's Kumitachi and the 1st kumitachi of Kashima they are essentially identical. Now does this make Saito or Osensei bad?? No. Look at most top level shihans in the aiki world today, most of their weapons stuff is essentially made up. ASU's and AAA's Kumi jo are essentially the same as Iwama. (although Saito himself changed the forms between 1974 and 1993. Now in both those federations they have similiar swordwork, principlewise but form Saotome "takes" form Yagyu shinkage ryu especially his whole concept of "Marubashi". Toyoda in the AAA largely has borrowed Iwama's kumitachi and has either modified himself or it has been modified by his senior students. Kanai's Iaido as well as Nishio's iaido are esentially their own creation as well. Now this in no way belittles their accomplishments or influence it merely stresses how they feel the need to stress certain principles of Aiki through weapons work. Aikido people are essentially practicing a Modern Martial art, NOT a classical ryu in any sense. We should remember that what we train in is not there to teach us battlefield techniques but morever the principles of Aiki, this was Osensei's wish. Not the mundane overscrutinization of lineage and minutae.