Here's some aikido done a bit more realistically.http://www.youtube.com/watch?v=0aJv48aVUko
I have no doubt the techniques are capable of being used in reality - maybe not as cleanly as demonstrated, but more or less (at least the majority). I've seen many of the techniques applied (usually in a more limited way) in ring fights (including the kick defences at the end).
That aikido is hard to apply is true. The reason is 2 fold:
First you need to learn fairly refined movement. To learn movements of this refinement requires many years of "non-live" isolation practise. After all, you can't learn a good golf swing unless you do it without pressure. And a golf swing has nothing on an aikido throw, believe me.
To use a better analogy, you couldn't expect to learn a proper baseline or net shot in tennis if you never spent time isolating the movement. If you just go straight into playing full tennis games because "you don't have time for isolated practise - you're too busy returning balls" you'll be wiped off by even a slightly
Second, once you've learned the technique you need to introduce it gradually into a live environment. While most aikidoka don't do this, it doesn't invalidate the technique, nor make it impossible. Free fighting has many more variables than a game of tennis, which means it is harder environment to apply technique of any kind. Refined technique can be applied in a free fighting environment provided you actually go to the trouble of training to do so.
The fact is that most people who have the inclination and patience to learn aikido aren't minded to train in more live enviroment. It is a matter of natural selection. Are people like fileboy ever going to start aikido? Are people who do aikido the types who might have joined and stayed in a gym like fileboy's?
Criticise the lack of intensity all you like - you're quite right. But as for the art - aikido is a highly skilled discipline with a similar technical base to BJJ or judo - trashing it or its experienced exponents by simplistically focussing on the training method and ignoring the technique shows some other "issues" imo. It is also deeply insulting of the many years of sweat and dedication aikidoka put into the mat.