I don't know, I'm not sure "taking on" someone is any different than a sporting event unless they were trying to kill each other which I'm sure they were not. I don't see how accepting a challenge from someone of another art could avoid being a competition. I don't know, maybe I'm wrong.
Was that activity pre or post war? I'm just curious.
Both pre and post.
If he participated in it, and his students participated in it with his knowledge (which we know to be the case), then it can not be as black and white as it being flatly prohibited. But then...things rarely are in Japan - Western thinking tends to like things a little more clearly defined.