Well after watching the vid, I realized you sure can pack a mat with people when they're all on their knees. Could it be as simple as that? Would the older ways (pre-Takeda) be to teach in smaller groups (like one on one)-- so that with the advent of huge classes, something had to be done?
I read that the Sagawa dojo was very heavy on seated techniques, so I wonder about Ueshiba starting it.
http://www.aikidojournal.com/article?articleID=242
The entire first month's curriculum is on the knees. (Does the author mean both partners on knees in zadori practice? I am interpretting it that way, but anyone with DR experience please tell me if that's wrong.)
Having read HIPS, I am appreciative of Daito-ryu probably being just Takeda doing whatever he liked. If for any reason he was fond of doing things from seiza, then his teaching may have heavily used them, regardless of historical context.
So, since Ueshiba and Sagawa (not friends) both used lots of seiza techniques.. (as long as my understanding of zadori is correct).. then I think it probably started with Takeda or earlier.
--JW