Nishio Sensei didn't create his own ryu of Aikido because he was dissatisfied with Aikido as an art form but as budo. Aikido's critics do not question it as an art form, they question it's combat/martial effectiveness. This is why I wanted to know whether there is a universal understanding/definition of what martial is, because it is important to the debate within the martial arts community. I've read people criticise Aikido for the techniques requiring too much compliancy to work, I've read criticisms for its apparent lack of atemi, I've read criticisms for its lack of competition and therefore the techniques being "untested". I have never read of anyone who criticises Aikido as an art form, for it not being sophisticated enough or not aesthetic or not philosophically satisfying etc.
For me Aikido is the epitomy of a martial art. It's techniques come from well established jutsu arts and their adaptation has resulted in a very pure, even beautiful use of blending and harmonization with your opponent's energy that is both martial and humanitarian. To watch Aikido being demonstrated is a wonderful experience, to see the waza being executed masterfully and their resulting effect in protecting uke and nage is truly art in motion.
The compliance issue is the only thing that really matters here; that's why I maintain that a good test for "martial" is whether you can make it work on someone who doesn't want it to work. There is a catch-22 here in that Aikido looks and feels much better when uke just goes with it completely. When you test each other things get more abrupt and rougher and sometimes techniques become unrecognizable.
I don't care much about atemi personally; I come from a dojo where we focus on it as much as possible without actually breaking out the pads and gloves, and my feeling is that if you want to actually be able to use atemi effectively, you need to break out the pads and gloves, which is going to be time taken from more important areas of training.
I believe competitive training is a martial cul-de-sac.
The "debate among the martial arts community" is for suckers. Any kind of martial arts training requires that you invest time, effort, and pure faith in what you are doing; obviously people outside of Aikido will be looking at it from significantly different cognitive frameworks. The fact that aikidoka are so critical of their own art is something I used to read as a great strength for people willing to stay in the art, before various folks decided we needed to change it to be more of a Kodokai Tai Chi.
Off topic, but as far as I know Nishio-sensei never created his own ryu even if some people seem to try to create one now. I suppose you could call his Toho Iai "Nishio-ryu Iaido", but in that case who is the current soke?
FWIW a "ryu" does not require a soke.