Hey MJS,
The clip you posted, and your description of how you feel things should be done are what I am talking about with the Traditional Free Form training, which is our version of sparring. As you can see, it is random from both sides, and there are clear attackers and defenders (as in an assault). In the beginning of this, though, the trainees start with nominated attacks, then limited free attacks, then finally unnominated, including weapons and groups. But yes, this is exactly what I was describing. Very cool find.
As to training drills, that is more the "learning" stage, and is the way any school teaches a technique. Here you go through the movement as shown by the instructor, and repeat to drill the action. But it is not exactly as you described here: "am I correct in saying that you mean....uke throws a punch at tori. Tori does a technique, uke just stands there letting tori do his thing. He offers no resistance, does not react to anything?"
That, I must say, seems closer to things that I have seen in (predominantly) karate and karate-related systems. In these demonstrations and drills, the attacker moves in with their attack (say, a stepping reverse punch), and the defender evades or blocks, then counters with a variety of strikes and kicks. The attacker stands in exactly the same place, immobile and unaffected by the barrage. This is very good training to develop control, distancing and targeting, but I'm sure most here will point out the obvious flaws in this method. In short, it teaches an unrealistic body shape as a result of your actions, and teaches the unconscious to not believe that the techniques work. So it's use should be limited.
In our schools, on the other hand, we utilise something we refer to as "play-acting". In this concept, the attacker comes in with their attack, and the defender responds with the technique. But each action results in a shift in the attackers body shape, a kick to the knee turns them, and limits their mobility, opening up the head as the arms are brought down, or the kidneys as they turn, and so on. So the students are taught to respond and react realistically to the techniques being applied... and are "gently" reminded what the effects would be if they are not responding realistically. By that I mean that if I hit someone in the throat (gently, with control), and they offer no responce (they don't seem affected by the strike), I let them know the effects of such a strike. Then, if they don't respond again, I let them feel the effects of the strike. That's usually enough.
But that is our standard way of repeatedly drilling our techniques, and resistance is definately there. It is just tempered by the experience level of the students themselves, the newer students have little to no resistance to begin with (to get used to the movements), then a little more added as they become mre confident with the actions. As the experience grows, the students are challenged to offer resistance, but still with the play-acting concept (in other words, the attack will not stop unless the defence is deemed strong or effective enough to work. They are not simply allowed to have the technique work because "that's what it says in the scrolls". But when the defence is effective, the resistance is lowered as appropriate).
The next step is to train the technique failing. In this stage, the technique is done as normal, but the attacker can thwart your efforts (hmm, cool word, not used enough these days...), and the student is shown ways of handling the new circumstances. Eventually, it becomes the free form randori we discussed earlier.
I must say, though, that this is not related to rank, it is a range that a single technique may be trained in in a single session, so every student gets each of these levels. The level of intensity gets raised with rank, though.
So....seems like we're on the same page in regards to the sparring, and what you will/will not gain from it. I do have a question on the underlined part. Now, when you said doing the techniques as drills, am I correct in saying that you mean....uke throws a punch at tori. Tori does a technique, uke just stands there letting tori do his thing. He offers no resistance, does not react to anything? 
