1. Just imagine what kind of knowledge you can gain from correctly assessing your skill against others in aikido... or life. I believe healthy competition tells us things which we may use to better act in a situation.
3. We [aikido people] tend to perceive competition as a negative concept and we strive to remove competition from everything in aikido. But then we compete in life. How can I live aikido if on one hand I try to remove competition from aikido whilest keeping competition in my life? I believe that competition is neither positive nor negative; we choose that perception. I seek to use knowledge I gain from competition to make better and more informed decisions in my life. I compete in aikido to test my knowledge and my skills and improve my aikido, I compete in life to test and improve my ability to protect myself and my family and give my family the best chance to live healthy, happy, and successful lives.
I don't have much to comment about the first part of your post, but I have some questions about the above section.
And how do you incorporate competition into aikido? You say you compete in aikido, but from checking out the dojo you have listed in you profile I see that it is and Aikikai (ASU) dojo. I guess I had been expecting a Shodokan dojo or the like. What does it mean for you to compete in aikido?
I think one can "test" one's aikido without competing or completely letting go of the type of interaction aikido is about. That sense of creating a connection with the other. I personnally am a fan of increasing the focus and intensity of attacks, doing more jiyu waza and working with less cooperative and less predictable ukes. But I try to stay away from turning it into a competition, where, by definition, there is something to win and something to lose. Not because this will eliminate competition from my existence, but because I feel it will help me train myself in such a way as to make me more at peace with everyone and everything around me.