I had followed the thread, but I didn't feel like getting involved. I felt enough people had made the points I would have made.
Short answer: Sparring with sharps is stupid beyond words. Unbelievably stupid.
Training with sharps, however, is a different story, but only in certain forms of training. There are certain Japanese swordsmanship schools that do certain paired kata with sharpened weapons. Each step is prearranged, and the practitioners have also been studying for years. There is definately a level of danger involved, but ultimately there is a high level of control, particularly because each person knows what the other is going to do. I know Guy Windsor occassionally has his advanced students do certain drills with sharps (but again, these are drills, not free play). And in the thread, someone brought up how the Italian master Viggiani recommended training with sharps to force the student to really worry about not being hit, but they failed to point out that Viggiani was also not talking about free fencing.