Not sure that bunkai and oyo really apply to iaido etc. My limited understanding is that they are more used by karate folks.
Also pretty sure that there is more than a couple of ways to define the terms.
In the goju I practice "bunkai" means a 2 person exercise wwhere nearly every movement from a given kata is practiced with a resistant/fairly resistant partner--its a "set" series of movement but they are throwing hard punches and kicks that must be blocked/avoided or your going to get pounded. Its BOTH sides of a given kata. My guess its look pretty similer to a paired partener kata in iaido.
In many koryu weapon schools much of the practice is done like that--2 person paired practice--but its usually called
"kata." Where "kata" in karate usually means a "single person individual exercise." Or something like that.
So I was taught that the "bunkai" was a "textbook" application of a given movement in the kata. The "oyo" version is--as I was taught--[b]much[/b]
less "textbook" and more individual, more persoanlly "practical" application of the same movement.
As an example, if you have seen the goju kata Seisan, there is movement that "looks" like a hooking block---which it is. That might be viewed as the "bunkai" but it can easily be used as a stight thrust finger thrust to the EYES-hooking back
from such a strike--that might be viewed as the "oyo" version.
Could easily be wrong--just what I was taught.
Sorry for the length. Pretty early in morning--not sure any of this is making sense.