Holy crap, that's clever. The Identification Friend-or-Foe (IFF) system it requires is going to have to be pretty high tech, but I like the idea! Use some kind of super-high-tech shape-memory alloy, and when the IFF detects a "friendly," the system briefly blunts the edges and tip.Smarty blade, cuts only what you want cut.
Better: it can be manually put in "Friendly" mode, and then can pass for a non-edged ceremonial weapon until needed.