For what it is worth, I believe both the story about him dodging the bullets fired by those students and him backing down from having the rifleman shoot at him.
I suspect his victory had more to do with his ability to read and size people up than his abilities, though they certainly helped.
Having worked in law enforcement firearms training, we have seen quite a few instances of shooters unable to point a gun at a human being. For some, it is the deep ingrained safety training that gets in the way, for others, well we don't know why they do it. In a recent simunitions (kind of like paintball but in real guns) exercise I myself was shot at from a distance of less than 4 feet and the fella missed- and I was standing still! He then froze after the first shot, and never shot again. The bullet did not come even close, it impacted about 3 feet from my head to my right.. When interviewed, he had no answer why he 1) didn't hit me and 2) froze. And the shooter was someone with over 100 hours of extensive firearms and training.
thus, those students on the firing line very likely had some difficulties actually drawing a bead on a human being, particularly one doing them no harm at the other time. The version I had heard was they were academy students, who probably won't real good at 25m anyway. I would think the law of averages would have been against OSensei though.
Look at the rifleman he backed away from. That man was a pro- and someone who seriously wanted to shoot O Sensei. I think O Sensei realized he was against someone who was up to the task of killing him and backed down. Quite wise.