I'm not saying that blocking is wrong in every circumstance, but I believe (and I've been taught) that it is not possible to block at the same instant one is executing a direct, powerful attack.
I agree with most of your post, certainly about principles etc. However, I don't agree with the above statement - I don't know if you've trained in any striking arts or not, but this the above statement doesn't hold up even in boxing, and that's a simple example. Granted if a person is going to get attacked on the street, it's probably going to be an all-out attack where a lot of "dojo Aikido" will work just fine, because it's not a fight. A fight is different, and if one doesn't have experience using Aikido in that situation, they will be surprised.