What of the other direct students of Osensei in Iwama?
Yes, of course, there are still direct students of the Founder training in Iwama, as there are at the Tokyo Hombu (separate from the senior shihans like Hiroshi Tada).
I have stated before that the iemoto transmission in aikido was skewed by the fact of two major centres of aikido, not one, and these major centres can be summed up by two names: Kisshomaru Ueshiba and Morihiro Saito. Both have gone on record as being the direct 'transmitters' of the Founder's aikiido.
However, since the death of Saito Morihiro Shihan, major changes have occurred in Iwama. The name has disappeared and 'Ibaragi Shibu' somehow does not convey the past magic of 'Iwama'. The other major direct student of O Sensei, Hiroshi Isoyama, has been very careful to maintain an extremely low profile indeed and he is not noted for ever teaching the aiki-ken
for which Iwama is famous, even though he may have learned this.
So it can be stated that the aberration in the iemoto transmission has been corrected and the dojo in Kasama is now clearly seen to be under the direct control of the Ueshiba family and the Aikikai. Of course, it always was under such control, but Kisshomaru Ueshiba never made any attempt to step on Saito Sensei's toes, to to speak.