"he told me that we could go faster if we wanted, but we would get hurt."
Kinda sounds like the old "We don't spar cause our style is too deadly"...just reworded. The problem with that is if you don't spar then how do you know it will work on resisting opponents? I can understand that things in combatives that are no brainers have to be simulated (eye gouging, biting etc..) but as far as stand up work and ground game that should be done as hard as possible without actually trying to injure your training partners (and yes there is a big difference between trainig hard and trying to injure).
Even Knife work can be done at full speed. Get a wooden training knife, everyone puts on headgear with face masks (plexi) and you just start stabbing the shit outta each other. You'll know you've been "stabbed" as it will definetly hurt and I would think it would be more advantageous to train that way as opposed to the slow, dancing movements in that clip above.