The article has the essence of the encounter, but the details are wrong:
Oyama's opponent was Li Ziming, a bagua master, not a tai chi guy. The 'smooth circular, arc-like movement...' is bagua technique, a Chinese martial art based on circularity.

My guess is that the fight ended in a draw, not a defeat for Oyama. Oyama was unable to score, but Li did not knock-down, nor knock-out Oyama either.

The piece about Oyama staying on to study tai chi (or bagua) sounds like fantasy. Have never heard of Oyama modifying Kyokushinkai with tai chi or bagua techniques. There is a circular parry shown in one of Oyama's books, but it bears little resemblance to anything in bagua.

The original link to the article is dead, but you can find it here:
http://www.taiji-bg.com/articles/mixed/m10.htm