I'm not a close student of Nishio sensei, but I will give you a short description of his 'lineage' the way I know of it. Nishio sensei heard O-sensei talk about the sword many times, and eventually decided to take up traditional iaido. Later he developed a new form of iaido - or aikitoho, as it's known - in order to forge together the movements and the mindset of aikido with the practice of the sword arts.
He has also developed a long row of ken-tai-ken and ken-tai-jo techniques that are directly comparable to aikido-techniques. These kata's which are practiced in pairs are good for exploring maai, and for understanding the basic foodwork.
Finally we do a lot of techniques 'jo-tori' and 'bokken-tori' - that is performing the technique with either a stick or a sword in the hand - adapting the technique to this situation without risking the life of uke.
Mind you This is a very short descripiton, which doesn't even begin to describe what the weapon works of Nishio sensei is really about. Check out his video tapes. They contain some of his weapons techniques as well - or better yet - come visit our dojo and we'll be happy to show you