bought a cheap hanwei iaito a few years back. ok blade with decent balance, not sharpen, but the point is still pretty wicked. i have stuck that thing in my hand a number of times during sheathing maneuvers and drew blood. saw a guy, at an aikido seminar, who had done iaido for a year or two, examined a live blade, ended up slicing his thumb which required a few stitches. i was at a weapon seminar earlier in the year, and we were doing some iaido stuffs. one guy had a bokken in a plastic sheath. one time, as he bended over, his bokken slipped out of the sheath, and he tried to catch it. i told him not to do that. he looked at me and didn't understand. i explained if that were a live blade, he just lost his hand. my iaido teacher drilled it into me that if the blade slipped out, do not ever trying to catch it, just let it fall.
the above stories are some of the cautionary tales when you have live blades. don't forget if you have young kids around, don't ever have live blade in the house. if you do, treat it like you have a loaded gun.
personally, i don't trust myself with live blade. cleaver, on the hand, i am quite comfortable with.