The founder of Aikido says "To learn Aikido is a never ending process", belts are just representation and recognition as to how long, have you studied the Discipline and your technical knowledge as well. Aikido learning is beyond that. I, myself studied this Discipline since 1997, and until this time, I'm still learning a lot of things. . If you were asking me, as to what Aikido's objectives. To be physically fit, is one of that. "Self-Defense", is just one of the whole part of it, the very essence of it, is to suppress your attacker at the quickest possible time, with the most minimal pain or damage. Meaning, in practical sense, very difficult to achieve under real-life scenarios. Our instinct would not agree to that. It is our very nature as human beings, to deal our attacker with the most fatal retaliation we could possibly gave him, so that he will no longer missed with us. Aikido is the complete irony of it. No matter how violent he might be, he's still a sacred being, and ought to be suppress only, so that he can no longer further damage unto you, or to another person. It's an indirect way of saying "I'm sorry for the discomfort I had inflicted on you, but you leave me no choice, but still I mean no harm to you, because if I did. I would have use excessive force", rather than the minimal required force, that we Aikidoka were strongly advice, to use at all times. Even when confronted by life-threatining situations, if there is still an alternative, we were discourage to use excessive or brute force, not just it is physically fatal, but it creates more conflict.
About the Examination you were referring to, it's "not kunuhay", it is for real. In our dojo, two types of Examination were given. Written and Randori. These are mandatory, when an Aikidoka wish for a promotion. But my Sensei gave more emphasis on Randori rather than the written exams for Aikidokas with kyu(japanese term for ranks) from white to brown belt. But higher belts it's like 30,70. Thirty-percent for written exam, seventy-percent for Randori. This is how we do things in our dojo, I'm not so sure if all Aikido dojos had the same system or policy with us.
Regarding your query about the "knife stuff", the real thing. Personally, don't agree with that. Hence, it is against our "Consti&bylaws"i(n laymans term), of Aikido. It should be emphasized at all times, that learning Aikido is a gradual process and using real weapon during practice, jeopardize the safety of an Aikidoka. I just don't know where the hell, did they get that kind of Principle in Teaching Aikido. But there is an exemption, during exhibition or presentation purposes. To add spice and thrill, but a pre-choreographed one, to make it real in the eyes of the audience. But are only done, by higher belts Aikidoka. But still dangerous, you can't afford to make a mistake. We usually had a minimal of 2 weeks preparation time. I'd like to tell you a story on that, real bladed weapon. Which had really happened in Tagbilaran City, few years ago. There was once a dojo which claims that they're teaching Aikido. As far as I can remember it was under a certain "Sensei Sapong". My classmate in college, who happened to be a Black Belt student of that club, had accidentally told me, in one of our "Tagay Session", that his Sensei used the real samurai, and you know what happened? During one of their practice? One student lost his right ankle. Since then, my classmate had refrained from going to their dojo.
I could only tell you things that, I had personally experience and studied. I could not tell you more than that. I don't have any idea, why are they using real weapon instead of boken(japanese term for wooden weapon). If you'd really want to study this Discipline for solely self-discipline, I would suggest strength is not very necessary, patience and a lot of mind development.