If the rules are made purely to decrease injury, why have a tonto to begin with? Why not just use your hand? Uke gave away a chance to stab, cut, and hit the nage once he grappled his gi with his knife. I can only assume that there is no score if contact is made after this, but why is this encouraged?
That is the separation of Toshu and Tanto randori...as Wolput Sensei explained.
In addition, in Tanto Randori, the roles of uke and nage are defined, and instantly reverse in certain situations.
Toshu Randori provides a much more assertive shiai.