My sensei, from whom I am still learning, is now 83 years old. I remember when I started learning from him, approximately 10 years ago, he was still teaching some stuff that in today's practices won't do at all, such as Suwari waza. Of course at that time he didn't have issues with his knees. Now he has.
He obviously had to adapt by learning and accepting his limitations.
I think that the same concept applies to aikido students. Every person knows his/her limitations and the most suitable person to know what to practice, is that same person. Understanding how those limitations modify our way of practicing is very important both from the student and the instructor side.
You asked where the line is. Well, in my opinion the lines should be drawn by every person that would like to learn this wonderful art. And you ,as an instructor, should treat every student with the same energy, patience and respect regardless his/her limitations.