Pretty much. The effect is removing the risk of damaging your weapon against a heavily armoured opponent, which is equivalent to (if slightly better than) the earth equivalent of adding durable to the weapon.
This verges into a different thread, but: what was the Artisan roll about? 
I've more sympathy here because changing a sword with the Adapt approach of Smithing (Water) makes sense - you are reforging the sword to (do a thing), and one of the things you can spend opportunity (not success) on is to add or remove razor-edged. 
The example given is "Fitting a blade onto a new hilt", TN 3 Smithing (Water) check, Downtime, so maybe you're changing the style of the hilt to allow you to put more strength behind the blade (such that you're less concerned about it striking a foe's armour and failing to penetrate) but the straightened, lengthened grip makes it ill-suited to the iaijutsu technique. Hence, mechanically speaking, no longer razor-edged.
Except, why were you breaking your primary weapon? At the point you chose which dice to keep, you knew if you had rolled enough bonus successes to cause damage. 
You can, if your ring score is high enough elect to keep enough bonus successes to cause at least 1 damage past the target's protection (say, a total of 3 successes with a katana against a target in lacquered armour).
If you don't roll 3 successes, you can always elect to keep only 1 die - which will cause a strike action to fail, and hence not trigger razor-edged and not damage your weapon.
If you only roll 2 successes against an armoured target, you have to voluntarily choose to hit, knowing you're probably not going to do damage, either in the hopes of one or more kept exploding successes triggering a further success (and hence damage) or accepting damage to your weapon to spend 2 opportunities and trigger a critical.
In either case, you chose to do that, knowing you would (a) damage your weapon and (b) as it stands inflict no wounds. The fact that the weapon has the razor-edged quality did not force that on you.
 

Regarding #3, there are rules to allow it:
 

More Potential Mistakes:
5. According to the rules for Artisan skills, you can use a Water Opportunity to remove Razor-Edged from a weapon when modifying that weapon with an Artisan skill (pg 82). This seems to suggest that one could remove the Razor-Edged from a Katana (and other edged weapons) while still retaining the weapons utility. The only downside seems to be that Iaijutsu (and maybe some other Techniques later down the line) will require the use of a Razor-Edged weapon, and so if you removed Razor-Edged from the Katana you could not Iaijutsu Strike. Is this intended? Is modifying your blade in this way dishonorable? Surely it doesn't make the weapon entirely dull, since one could remove Razor-Edged from Knives and the Knives would still be quite useful (suggesting that the Knives still have some edged bite to them). The ability to remove Razor-Edged seems really powerful, given how important it is to avoid breaking one's primary weapons of choice. Are we really supposed to be able to just remove it by succeeded at a single Artisan (Water) roll?

1. The Current Beta Rulebook does not have conversion rates between the various currencies of Rokugan. It does not tell me how many Zeni there are in a Bu, or how many Bu in a Koku. (Looking at other posts, they seem to agree that conversion rates are not in the book).
2. The Paragon of Bushido Distinction (pg 65) tells us that one could be a Paragon of "Courage (Fire), Propriety (Air), Compassion (Water), Loyalty (Earth), Justice (Void), Mindfulness (Void), Truth (Void).", but these do not actually match up with the tenets of Bushido. In contrast, the Disdain for a Bushido Tenet Adversity (pg 70) tells us that one could disdain "Courage (Fire), Courtesy (Air), Compassion (Water), Loyalty (Earth), Righteousness (Void), Honor (Void), Sincerity (Void)."
3. Certain Schools say that the purchase of higher-level Techniques (which are designated for ranks higher than one's school rank) can be used to help advance up in School Rank. For instance, the Rank 2 Technique Iron Forest Style is supposed to help Rank 1 Akodo Bushis reach rank 2 (pg 52). Yet, these higher-level techniques cannot be bought at one's current school rank, and there appears to be nothing in the book that says these rank-advancing techniques are an exception. I presume they are meant to be an exception, but something should clearly state them to be such.
4. I am unsure as to whether this is a genuine mistake, but it appears as if one can use multiple of the Rank 2 "Style" techniques at the same time. For instance, if I am wielding two weapons (each in a one-handed grip), I can be both in Spinning Blades Style and Veiled Menace Style. Am I supposed to be imagining these "Styles" as complete ways of approaching the fight, or are they meant to just loosely categorize the way one is approaching the fight such that one could reasonable in multiple "Styles" at once? When I attack while dual-wielding in this way, against an unaware opponent, and I get 3+ opportunities, the book as written seems to say that I can use those opportunities to activate both "Style" techniques. Is this intended, or are styles meant to be incompatible with one another?
Not sure if this is the right way to go about pointing out potential errors. Please tell me if I've made any mistakes myself.

While we are commenting on the symbols, I would like it very much if they added a gray text box explaining what each of the symbols was (cherry blossom petal, chrysanthemum flower, migi hitotsudomoe, and migi mitsudomoe), and how its meaning relates to L5R. 

While we are commenting on the symbols, I would like it very much if they added a gray text box explaining what each of the symbols was (cherry blossom petal, chrysanthemum flower, migi hitotsudomoe, and migi mitsudomoe), and how its meaning relates to L5R. 

I think Iaijutsu Strike is fine, they should just supplement it with a Rank 2 Iaijutsu Style called "Falling Blossom Style" or something like that. Since Iaijutsu Strike lets you ready your weapon for free (in a one-handed grip), Falling Blossom Style would say something like the following: "When you make a Martial Arts [Melee] Attack with a Razor-Edged weapon in a one-handed grip, you may spend an opportunity to treat that weapon as if it were in a two-handed grip for the purpose of the attack and to stow it away after the attack. If you choose to spend more than one opportunity in this way, the weapon is treated as having +1 deadliness per opportunity spent beyond the first".
This would give every Samurai the ability to purchase Iaijutsu Strike and thus to be able to do Iaijutsu, but it would also allow there to be Samurai (such as the Kakita Duelist) who are particularly good at Iaijutsu and feel comfortable incorporating it into their overall fighting style.
 
Edit: Actually, since sheathing a weapon is already a 1 Opportunity thing one can do with Martial Arts checks (pg 98), Iaijutsu Strike would be balanced if you just replaced its current (redundant) 2 Opportunity sheathing to a 2 Opportunity critical strike like with the Strike action. This would make Iaijutsu do consistently more damage than Strike, but at the cost of using 1 Opportunity to sheath your weapon again each round.

While we are commenting on the symbols, I would like it very much if they added a gray text box explaining what each of the symbols was (cherry blossom petal, chrysanthemum flower, migi hitotsudomoe, and migi mitsudomoe), and how its meaning relates to L5R. 

I disagree with most of what The Veteran Sergent said. Ninjo, Giri, Disadvantages, and Outbursts are supposed to exist in any Samurai-based roleplaying game. If people used to play the old L5R game with character's that didn't have goals, duties, character flaws, and emotional quirks, they were doing it wrong. I think many of the Sergent's criticisms only hold if you think of these mechanics as more than what they are: background conditions. If my character has the Fear of Death Anxiety, why would the GM have to revolve gameplay around it? I'm just supposed to roleplay it, and no side missions are necessary. Outbursts are also not supposed to be incredibly disruptive. Remember, Rokugan is an incredibly stoic culture, and something as simple as attempting to suppress a chuckle for the rest of the scene can be an "outburst". Ninjo and Giri are only as disruptive or useful as the Storyteller and Players make them. Crab players have always had to come up with a good reason to be with a party if they aren't defending the Kaiu wall, and Kolat characters have always had to come up with a good reason to stick with a party who are hunting down his fellow Kolat. These things are not new, they are just more explicit and harder to ignore. Which is good, because they were always supposed to be core aspects of the characters, and were never meant to be ignored. Also, Void Points are supposed to be given out at the GM's discretion, not just by Disadvantages. If your players don't roleplay well enough to merit Void points, that sounds like their problem.
On the other hand, the Sergent is mostly right about the stances. Void seems to need some sort of buff (its almost never better than Water), and Earth needs some sort of nerf (especially since it prevents a lot of fun mechanics). Earth should probably just be changed so that it only prevents opportunity-based critical strikes and opportunity-based conditions, but not persistent effects overall. Void should probably give you an extra opportunity or something, since none of the stances do something like that and it would give it a unique role to play, even if you removed the strife-negating effect in the process. In addition to balance concerns about the stances, most players are justifiably concerned about the low number of skills one gets at character creation. Just giving the player the ability to allocate 3 skills freely would probably be enough to alleviate this worry, so long as one capped this allocation at skill rank 2. In addition, the Battle Rage outburst should probably be rewritten into a negative thing, rather than a positive one. Outbursting shouldn't really be a good thing, ever. The reason why a Matsu might prefer Water stance (and the Way of the Lion ability) is because it allows them to channel their anger into productive endeavors, without worrying about losing control. This makes plenty sense for the flavor of the Matsu, without needing some sort of Battle Rage in addition to this.

While we are commenting on the symbols, I would like it very much if they added a gray text box explaining what each of the symbols was (cherry blossom petal, chrysanthemum flower, migi hitotsudomoe, and migi mitsudomoe), and how its meaning relates to L5R. 

Don't be silly. Ninjas don't exist.

Your idea about attacking the weak points in someone's armor, while thematically appropriate, would not work in the system. Almost everyone will have Ashigaru or better armor, meaning 3 resistance. In order to ever make it worthwhile to attack through armor rather than target the weak points, the TN increase for the latter would have to be greater than the resistance of the armor. Martial Arts attacks are 2+ TN, so targeting the weakpoints would have to be 6+ TN. This is a problem insofar as such TNs are nearly impossible to reach and insofar as the system is not built around people attempting to consistently get such TNs. 6+ TN is supposed to be God-like.
 
I would agree, if Earth Stance did not prevent Striking As Water (Earth Stance prevents persistent effects, and Striking As Water's effect is a persistent effect). This means that, in the current system, someone in Earth Stance who uses Striking as Earth or really good armor to get 5-8 resistance will be able to consistently Damage our weapons which are Razor-Edged.

Regardless of any debate whether Iaijutsu is a good technique:
P108: Iaijutsu Opportunities
P98: Martial Skills
 
I get that re-sheathing the weapon is more useful to an Iaijutsu practitioner, but you're giving him an opportunity which he already has and charging him at twice the cost, and since it's *+, it's not like he even has the chance to sheath both weapons for *** when a normal samurai could only sheath one.

Here we go! 
Character creation: love the 20 question set up, but needs a quick reference sheet for those who have done it more than a few times.  I keep going back and forth on whether or not we need more xp thrown in here or not. While characters may look very similar on paper, just the difference in one or two rings will make them play very different at the table. 
advantage/ disadvantage:  keep them as is, absolutely love the way it's done. Please never go back to the way it was done before. 
weapons:  fine, would like some more please. 
schools:  just need more. SUPER interested to see how you guys deal with advanced schools or alternate techniques (if you feel you need to at all with the way rank progression is currently handled.) Also, keep the current rank progression system. 
school types:  one of my biggest issues with the previous edition was how monks and shugenja could dominate the dedicated courtiers and bushi at what they did. This doesn't appear to be the case anymore... Please,  PLEASE don't go back to that design idea.
base system/ dice/ strife:  it's fine. Maybe a little adjustment to how quickly strife is gained but otherwise fine. 
This system is designed to inform the story, not just to resolve actions.  it's effective at it, to.  You may not like it... and that's fine. But don't say it's bad. It's very good at what it's made to do.