whatever the kaudi started out as , it seems that it now embodies all of the theoretical possibilities mentioned. no reason it could not have started out for a practical reason, been embellished as a decoration, and then assigned religious and traditional meanings, feel free to swap the order around, which came first or next not terribly important. i think the kami's once said it was not a kukhri unless it had the kaudi and been thru the proper blessing ceremony. wonder if the 'attitude' has been so blessed?
p.s. - so far the most important use some people subscribe to is that it is there as a sight for throwing the kukhri accurately. of course as we all know it's flight dynamics, and that it may make a respectible and deadly boomerang if thrown accurately by a master, one would need a good sighting system.
some experiments with optical sights were somewhat inconclusive, but laser sighting systems now show promise. ancient armouries in fact frequently show chain mail gloves on suits of armour which of course are there to protect the hand when catching the returning kukhri. these were so successful that you frequently see chainmail gloves on western armour and even plate ones in latter suits. like the cho, their original use has been largely forgotten and often mistakenly ascribed to other protective uses.
we of course do not recommend throwing of your kukhri until you have completed the full course of instruction and are at least 15th dan and wear the coveted fluorescent yellow and orange striped belt with the gold tassles and the little silver and black ducky that squeeks, of that rank. if you are below that level serious damage to yourself, your surroundings and to your kukhri are the most likely result. and you will probably not damage the target. if you are at or above that level, you of course recognise the gravity and seriousness of this course of action and are thus likely to never use this skill.