Carl, thanks for the thread. This is not meant to be an attack on anyone, but, personally, I suspect questioning Morhei Ueshibas teaching ability often misses (amongst other things) what he was about at certain points in his life and how that relates to him teaching.
My own take, of course based only on the snippets of information we have and informed by what more knowledgable people have written here over the years, is that Ueshiba was first of all a person involved in a life long passionate (call it obsessive, I dont mind) search process of a highly individual nature that dominated all other aspects of his life. For a long time, daito ryu was quite central to that process, and since he got very good at it he taught, because daito ryu entails that. Later, I believe the different elements of his search all came together in a way that made deep and evident sense to him, and from that point onward he just expressed his individual, cosmologically all-encompassing, ongoing process. Expressing that process (and I draw on questions Peter Goldsbury, amongs others, has brought up), I do not think he had "an art" to "pass on" anymore, and I doubt teaching in the way it is suggested here (in my interpretation: taking structured and effective steps to pass on a clearly circumscribed art) was part of his expression.
It was suggested to him that he call the process aikido, and so he did, we dont know what he thought about it really. Ellis Amdur suggests, if I remember correctly, the possibilty that he saw himself as an avatar, and as such may not have seen any need for others to get as "good" as him in the art.
Note that I am not saying he did not teach, nor that he did not care about passing stuff on that was important to him. It may just not have been aikido in the way we see it, to the people we think, with the goals we have in mind.
Now I believe this pattern, expressing the results of a passionate search process and being confronted with the requirement to "teach" as a result while not having a body of knowledge to pass on, is actually quite common in highly creative people involved in similar processes. From some cursory reading it seems to me something similar was the case for Moshe Feldenkrais; in his case, the insight that he taught a "method of no-method" was somehow preserved, but is still at odds with the fact that there is now the "Feldenkrais method". It would be interesting to know whether there are other examples.
So, in a way, I arrive at a point similar to Grahams: how does a student best learn from such a person and process. One student of both Morihei Ueshiba and Feldenkrais told me about the later: "I did not study with Moshe to learn another profession. I wanted to understand how he thought" That seems a good strating point to me.
But anyway, I feel I am just paraphrasing Goldsbury, Amdur and years of reading here, etc., if that is the case pardon me please...