i believe atemi is essential to aikido. and for several reasons it is obvious.
the first is that atemi waza creates space and can be a means of maintaining ma-ai. so atemi can buy u time to get into position for a response
and of of course atemi can be used to rediret uke's attitude and direction. a feigned blow or strike to a unopen face will slow or re direct an attacker. so the atemi can help help nage control and lead ukes' mind. and taking over ukes' mind is key in establishing control and to the final redirection of energy.
and during technique nage should know where atemi waza can or should be applied. atemi waza shows good martial understanding of the event. as we remember aikido is an advanced art by which techniques have been refined to the point whereas the technique can takeover an attack and render it useless. aikido techiques evolved from lethal applications. so its important to know that during technique there are points by which nage can turn the technique into a deadly technique. otherwise technique becomes meaningless; unless nage fully understand why he is doing certain steps during an application of technique. and atemi waza reminds us that in certain points during application of techique that there is the possibilty to do harm or strike uke. so atemi can be used as dare i say check points during technique.
as for blocking atemi, i believe every attempt should be made to cover up. who wants to be hit lol