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I really don't see a problem with the play at all. The black group is seki as it stands according to the algorithmic definition of seki. Therefore, if black refuses to capture and connect, he is simply out one point.
You are relying upon a modern understanding. At the time games ended by agreement, not by passes. Black did not agree to end the game, and would not resolve the ko, as the referee told him to do. There were no written rules to consult, so the problem was referred to Honinbo Shusai and Baron Okura, who issued an enigmatic ruling.
Actually I can't see how this became a rules crisis either. It seems to me that white, by refusing to fill the ko effectivly grants black a point. And black refuses to take that one point. So this is only a crisis since both players refuse to settle the situation. And, while there are positions where that makes sense (5 points no capture), in this position there is no disadvantage to the side setteling the ko. Indeed black would gain a capture if he chose to take the ko. So what am I missing?
Bill:
Probably what you are missing is the politics. This was part of an East-West team competition. Any sensible (to our eyes) way of resolving the ko would lead to a Black loss. And surely there had been many such losses over the centuries. But there were no written rules and the team decided to make it an issue.