Personally, I agree with what Mgslee suggested about the sword not being in constant insta-death mode. He was using it to torture Ibiki, and Aoi definately seemed to be playing with the Naruto and co.

As for the why start throwing around chidoris and rasengans and this fight sucks compared to the Zabuza fight complaints I think that they understand they are genin and Aoi is a jounin, they probably feel they need to match power with power and the latest power they've learned is chidori and rasengan. And so far that strategy has worked for them. Oh here is a crazy sand demon entrenched in an impregnable sphere, chidori. Sand demon morphing, chidori. Shit i'm not doing anything to Kabuto, rasengan. Shit i missed, rasengan again. I actually like that for once we bring these genin down a notch. I'm not saying they absolutely must suck, they are definately exceptional, but within the constraints of relativity.

It will be interesting to see how they this fight ends. It would suck if they somehow pull something out of their ass and oh Naruto saves the day. My preference would be that Idate somehow gets by Aoi while the fight goes on, eventually wining and then Aoi would just stop fighting and leave, his job being over, or maybe something else.