The television show "Mythbusters" investigated and tested the story of catching a live blade between the palms. They used robotic arms and ballistic gel hands for their experiments and with all sort of trick electronic devices and switches, they were unable to do it. They visited a San Francisco area Ninjutsu instructor who demonstrated the catch with one of his students. As I watched the human demonstration it appeared to me (cynic that I am) that the student wasn't delivering a killing blow that would split the body, but rather making a very controlled shomenuchi cut that stopped at the point where the palms would meet the blade. As I recall, they labeled the myth as "plausible", but very unlikely to actually happen.
Nope, they called it busted for a bare-handed between the palms catch. The Ninjitsu instructor demonstrated that the "correct" technique involved stepping out of the way and doing the actual blade catching (more of a block) with a hand protected by metal climbing claws like these