Whew, there's a number of wrong things in here..
First of all, Iaijutsu focus only requires you to have drawn the weapon that round, so you don't need to draw a new weapon for each attack. This also means that in the first round you would only need to have one knife out, which means you wouldn't need to worry about two weapon penalties.
Also, Iaijutsu focus does work with any melee weapon...I believe you are thinking of the Iaijutsu master prestige class, which requires someone to have weapon proficiency (or is it focus? I forget...) in katana, and I think that some of the abilities also require the use of a katana...but the skill itself, which can be taken by anyone, can be used with any melee weapon.
Also, the iaijutsu focus damage is applied to every attack, regardless of any shuriken-like rules for sneak attacks. Sneak attacks are supposed to be precise and such, whereas Iaijutsu focus simply states that you must have just drawn the weapon (that same round) and catch your opponent flat-footed. I'm pretty sure this means that you get the damage on all attacks, especially considering that one of the abilities of the iaijutsu master prestige class is to get two attacks with one attack action-seeing as this class is focused on using the iaijutsu focus skill, I doubt that they would get this ability if they couldn't use that skill on every attack. So maybe he would lose the sneak attack damage on the second attack of each knife, but that's really not that big a deal (only like 3 damage average).
Also, bluff does not allow you to use iaijutsu focus skill for extra damage. All bluff does is deny your opponent their dexterity bonus, and though this is the same thing that happens when you are flat-footed, using bluff does not actually make you flat-footed (in the same way as attacking someone from hiding does not make them "flat-footed", they just lose their dex to AC). "Flat-footed" is a condition that can ONLY happen in the first round of combat (and surprise rounds), by definition, and bluff does not allow you to get someone flat-footed. However using the Flick of the Wrist feat from Song and Silence does allow you to catch your opponent flat-footed after the first round of combat, and as far as I know this is the only other way to get someone flat-footed (and it specifically states in the description of the feat that it does make the person flat-footed).
So what the original smackdown character would do is quickdraw+expert tactician+attack, making 4 attacks at highest attack bonus in the first round of combat. Then, if they win initiative, they can drop the first knife, draw two others and make 6 attacks (or at least I think it's 6, I'm not sure entirely how the crescen knife works...) that round. Then, in the next round, they can drop those two knives, draw one more with flick of the wrist, and then get 4 attacks (attack+expert tactician) if that is successful. I'm pretty sure this is how things would work...I'm not all that sure about expert tactician and crescent knife, but I know that all the details about iaijutsu focus , flat-footedness/bluffing/losing dex to ac, and quickdraw and such are spot-on.