Like I said, they are selling em. There is a lot of money in cheap Chinese swords and those who stand to profit (usually the same ones that used to sell the £30 wall-hangers) will push the envelope as far as they think they can get away with. That doesnt mean they are right. As a customer, it's my liberty and me that risks the court case/criminal record/fine, so I'll come to my own decision. The law says "traditional methods of making swords by hand". To me that's pretty clear and I'm struggling to twist it round to include heavy machinery, but if you're happy with it then crack on.
However, the government have dropped the ball a bit with the legislation. They made it in haste and then made the amendment in haste. It's badly worded and will be a real mess should a case go to court. At the very least, they would actually have to try and work out how a particular sword was actually made, which is a lot easier said than done, particularly when the sword comes from China. Personally, I'm going to err on the side of caution until it's clear one way or the other, but it's a stupid piece of legislation that was wholly unnecessary and has done nothing except muddy the waters. Until a test case has gone through the courts, I doubt anybody's opinion on the subject is worth much to be honest.