No problem with substituting Aikido for Art of Peace.
It depends - it's not exactly wrong, but you get a lot of people who don't know any better taking literal meaning out of a metaphorical (poetic) translation. Also, there's the issue of why a translation would add a metaphorical layer there that didn't exist in the original in the first place. There are times when Ueshiba said "the art of peace", or something similar - this isn't one of them.
It just makes it harder to get back to the original, IMO. I'd have no complaint if there were other translations for folks to compare it to, and everybody was aware that it is a poetic, interpretive, translation, but that's usually not the case.
There's a little more about this in this article