I agree that there is no place for live blade practice in an aikido dojo. A possible exception to this might be in the solo practice of iaido kata (and I've heard of many instances of where practitioners were injured just doing this!). I have the benefit of a little training in knife fighting from another martial art I used to practice, and can tell you that the attacks we practice with the tanto in aikido are VERY stylized and not very close to the way any trained knife fighter would fight. A trained knife fighter can change hands, positions, and grips at a moment's notice, and many times will conceal the weapon with their bodies, thus minimizing the telegraphing of any attack or body movement. And they will be knowledgeable of the most lethal and damaging ways to injure the human body (in terms of nerve, organ, tissue and blood vessel attacks). VERY DANGEROUS to defend against! Bladed weapons are excellent reminders of how fragile the human body really is.
I'm still amazed how in aikido, some students still don't learn to at least acknowledge and respect the blade edge of the tanto when practicing. That and the fact that at least in the dojo where I practice, there are some senior students who actually collect and carry around knives in the street. I am troubled by this because it is illegal AND in my mind contrary to the underlying philosohy of aikido (plus I suspect that they really wouldn't know how to use them very well on the street if they needed to).
That's not to say that one doesn't learn any benefitial self defense against knife attacks in aikido. You definitely can, if practiced properly and diligently for a while.