The difference between iaido and iaijutsu is analogous to the difference between judo and jujutsu:
Iaidō derives from older Japanese martial traditions and has historically been referred to as “iaijutsu.” While “iaijutsu” continues to be used today, the term now refers to more traditional practices rooted in martial applications, while “iaidō” refers to its modern equivalent, with greater emphasis on self-development rather than combat.
Further reading: The development of judo in Britain: a sociological study, Volume 1981, Part 1 (p.27):
Martial Arts and Ways in the Broader Social Context
The most obvious point to be made here is that the
'pure' form of classical bujutsu arose within a society
where lethal combat was a regular occurrence and that,
taking the form (bujutsu) overall, it was 'diluted' under
general conditions of peace. Classical bujutsu forms
thus became one element in a picture which came to include
budo systems with significant differences in character
from bujutsu. The rise of classical budo within the
generally peaceful setting of the Tokugawa regime would
seem to suggest support for the Elias 'civilisation'
thesis (27) in that, over time, these forms steadily
shifted in emphasis away from techniques for killing an
opponent and further towards aims of spiritual development
with the eventual goal of self-perfection. As Draeger
has stressed, budo disciplines came increasingly to
incorporate 'unrealistic' and 'combatively inane' elements
of technique (28). Such developments should be looked at
in forms central to classical bujutsu, on their shift to
budo form. Changes may be looked at specifically in
kenjutsu and iaijutsu, in their development as 'do' forms,
since they involve the sword, which may be taken as
having been the supreme weapon in the classical bujutsu.
A number of points may be made to illustrate the
combatively impractical nature of kendo and Iaido practice
in comparison with kenjutsu and Iaijutsu (29).
the kneeling posture (seiza) often used as
the starting-point for iaido techniques is a 'dead'
posture; Draeger states that the classical warrior
"...much preferred iai-goshi, a low crouching
posture in which his right knee was raised;
this kept him off damp or soiled surfaces and
afforded him instant mobility and great speed
in drawing his sword to meet an emergency" (30),
but he sees seiza as a posture
"...well-suited to an urban, peaceful way of life" (31),
used frequently in ordinary life in the Tokugawa period.
this involves the actual action of drawing the sword, which, in Iaido
"...is generally done far too slowly, and in
a manner that withdraws as much as eighty
percent of the blade from the scabbard before
any appreciable speed of action occurs" (32).
the action of 'chiburi', that is 'shaking
blood off the blade' is done in an 'inefficient' way,
bearing in mind that a classical warrior would have
cleaned his blade with a cloth or piece of paper.
the final act of returning the blade to
the scabbard ('noto') is made quickly, as a demonstration
of skill. The classical warrior would have returned the
sword slowly and carefully, manifesting
(continued alertness and concentration) in relation to
his surroundings, but in the case of iaido the swift
return of the blade to the scabbard is positively valued
as a test of concentration and 'feel' in the technique,
the blade passing close to the fingers of the left hand,
which is holding the scabbard.
a more general point is made by Draeger about
the understanding, or lack of it, of the classical warrior's
customs or 'manners' on the part of iaido exponents.
One manifestation of a lack of understanding is the
condition of a swordsman's koiguchi (the open end of the
scabbard). Draeger quoted Taisaburo Nakamura, a 'master
technician' of martial studies and one devoted to
"I have carefully examined many hundreds of
swords belonging to modern swordsmen, and
scarcely have I found one of which the koiguchi
...was unscarred" (33).
The significance of this point is that the classical
warrior evaluated skill-levels by the condition of the
koiguchi, which would only be damaged if the return of
the sword to the scabbard was not done correctly.