Hello Graham, Happy New Year!

I believe that it is always good to begin with what Morihei Ueshiba actually stated, then look at the translations. I have two points to make.

First, if you read further on in The Heart of Aikido, there is another section, on pp. 98-103, where Ueshiba recounts his wartime experiences and his so-called ‘mystical' experience, when he was called upon to build the Iwama dojo. On pp.99-100, there is an explicit reference to ‘competitive matches' in aikido. The Japanese original appears on p. 128 of Takemusu Aiki. For those who can read Japanese, Here are the relevant paragraphs:

　一国を侵略して一人を殺すことではなく、みなそれぞれに処を得させて生かし、世界大家族としての集いとなって、一元の営みの分身分業として働けるようにするのが、合気道 の目標であり、宇宙建国の大精神であります。これが明治大帝の大み心であったと、今日なお迎いでおります。
　絶えずこの祈り争いをせさんようにする。だから合気道は試合を厳禁している。がその実は大なる愛の攻撃精神、和合、平和への精神である。

The closest John Stevens gets to a translation of part of this is the following paragraph:

"The purpose of Aikido is to help us fulfill our mission to bring peace and harmony to this world. That is why there are no competitive matches in Aikido, no contests. We attack with the power of Love, and we wield the weapons of harmony and peace." (The Heart of Aikido, pp. 99-100.)

The Takamusu Aiki passage is quoted in another place. This is Kisshomaru Ueshiba's biography of Morihei Ueshiba, which was translated into English only recently. This translation is much closer than what Mr Stevens manages to achieve above. Kisshomaru does not reproduce the Takamusu Aiki passage exactly. Here is Kisshomaru's version:

　他の国を侵略して人を殺して勝ったなどと錯覚するのは愚かです。みなそれぞれ、処を得つつ生きてゆき、世界大家族としての集いとなって、一元の営みの分身分業として働け るようにするのが、合気道の目標であり、宇宙建国の大精神であります。これが明治大帝の大み心であったと、今日なお迎いでおります。
　絶えずこの祈りによって、争いをせさんようにする。だから合気道は試合を厳禁している。がその実は大いなる愛の攻撃精神、和合、平和への精神です。

Here is a translation of the above passage:

"It is foolish to invade someone else's country, killing people and achieving the illusion of victory. The objective of Aikido mirrors that of the spirit at the foundation of the universe: for all to have a place to call home, to be part of the same family, to work as children of the same creative source. Even today, I truly believe that this was what Emperor Meiji had in mind. It is for this that we always pray, avoiding conflict at all cost. For this reason, I prohibit competition in Aikido. However, the love which is part of Aikido actively seeks concord and peace." (Kisshomaru Ueshiba, A Life in Aikido, p. 43.)

Secondly, here is a closer translation of the passage that you quoted in your opening post, plus some essential context. The translation is by Sonoko Tanaka and was published by Stan Pranin. It can be found on Stan's Aikido Journal website.

"Takemusu aiki is a service we offer in order to protect the worlds in which all Universal activity occurs, that is, the three Worlds—Appearance, Subconscious and Divine—and help them to harmonize with each other and flourish. We call it "takemusu aiki" when we clarify the true meaning of God's works, purify the Great Way and dedicate ourselves to assist the Great Way to become wholesome. This is my firm belief.
Therefore, the martial arts (budo) of our country are not called sports. The purpose of martial arts is to shape and perfect ourselves. Once we build ourselves up, we have to realize everything successfully and, first of all, we, as human beings, must protect all nature.
In our country, originally, we do not have such sports as people have in Western countries. Some people are delighted to say that the Japanese martial arts have gained in popularity since they became sports. However, this is a gross misunderstanding that shows they do not know at all what the Japanese martial arts really are.
Sports are games and pastimes that do not involve the spirit. They are competitions only between physical bodies and not between souls. Thus, they are competitions merely for the sake of pleasure. The Japanese martial arts are a competition in how we can express and realize love that unites and protects everything in harmony and helps this world to prosper.
The Way that preserves this world is a competition to protect the spirit and also the physical world. It is a competition to completely guard the Way of birth and growth of all nature, and to lovingly cultivate the Way of flourishing of all, through the breath of A-UM (breathing out and in) in which the spirit and physical body are balanced in harmony. This competition was exactly the same activity of the creation of today's world engaged in by the Great God through the two deities of Izanagi and Izanami. It is the Way to daily thank the Great God for His work and thus it is a prayer. There is nothing better than a prayer. Even when we feel ill or unpleasant, we can become refreshed and get well by offering prayers. I have experienced this through my prayers. I stand on the platform of Heaven and worship God facing to the east and heavenward. I offer my gratitude in prayer standing in the center of the Earth together with everything existing between Heaven and Earth. This is the true aikido and takemusu. This is the source of harmonious interaction between the breath of fire and water."

Best wishes,

P A Goldsbury