Iaijutsu (Ex): At 7th level, a kensai applies his Intelligence modifier as well as his Dexterity modifier on initiative rolls (minimum 0). A kensai may make attacks of opportunity when flat-footed, and may draw his favored weapon as a free action as part of taking an attack of opportunity. This ability replaces the medium armor ability.
Looking at this I see that it doesn't look like it does what it was intended to do.. It looks like it's supposed to allow you to threaten when you're unarmed. But it only says "you can draw it when you get an attack of opportunity" meaning this is actually only useful if you're threating via some other means?