Although live blades are very dangerous I think they can be an aid to training
I agree with Erik up above and have to say that training with live blades in an aikido context is, in my mind, not wise and only leads to unnecessary injuries. You can and should be able to train with the mindset you described above with a "fake" knife.
For those that want to push the envelope youcan do what I do and take a live blade and grind it so that it is not very sharp any more. It will still provide a fair amount of mental tension as it is fairly dangerous but will be a lot more forgiving than a sharpened live blade.
If one is going to do anything other than straight forward kihon tanto dori you should wear eye protection. There is simply no reason to catch a tip in the eye just so you can play more realistically. This isn't the traditional approach but it is the sensible one.