I just find it strange to think Nishio Sensei would dedicate so much of his life to Aikido if he really believed 99% of it was ineffective. Nishio Sensei obviously is concerned about Aikido retaining its martial integrity as an art and has sought to augment this by becoming a student of other forms of budo. However, he could easily have chosen to give up Aikido in favour of another martial art that he saw as more effective.
Oh, he thought Ueshiba's aikido was effective. What he saw that he didn't feel to be valid as a martial art was the way most people were training aikido. You have to understand that Ueshiba was, among other things, highly skilled with weapons. And Nishio was one of the very few students who actually became skilled in the use of weapons, and also incorporated them intimately in his aikido development. He didn't actually have to give up aikido, he was allowed to develop his own discoveries, Nishio Aikido. So he did start his own ryu.
Nishio was critical of aikido teachers and practices that don't employ atemi and weapons. You'd be hard pressed to find a direct student of Ueshiba who continuously harps on the principles of aikido and budo to the degree that Nishio does.