Oh no! I giant fire ball is coming at us at moderate speed from far away! Let us stand here for several seconds and watch as it comes and kills us! I love watching Jin and Margulis' fight. Great scene.
That technique is called Shirahadori. It's pretty badass, but for obvious reasons, most schools only encourage you to use it if you can't dodge the attack.
Unpractical indeed, but like I said, only in extreme situations, better to risk getting your hands than your life. And the user would only hold the sword in his hands for an instant. Also, this technique is meant to be used against a katana. The nature of how they're used and shaped take away manuverability, making them more predictable, plus them moving faster doesn't really increase their ability to cut, unlike nearly all other swords, so it's within the realm of possibility, just unlikely.
It's rare to see such a nice battle choreography in a game, no, even in anime something of that level is pretty rare. Certainly, eons ahead of crappy fights in like, let's say, Bleach. They definitely tried to make this game of highest quality possible, hehe.
Shirahadori? it may look nice on screen but would never work in a real fight,catch a sword like that between yur palms and all hed have to do is twist his wrist or thrust his sword forward.Not to mention having perfect timing and almost psychic reflexes to even achieve such a feat.Very unpractical lol.