Don't forget head movements. On your turns remember to turn your head and face your "opponent". Also try not to do your kata too fast, alot of people let their nerves get the better of them and perform way too fast, so relax and enjoy the experience.
I have heard of something similar to this but just like you I'm not sure how true it is. What I heard of was something like if someone attacks you empty handed you can use a knife, if they use a knife you can use a gun etc. I never really gave it much thought because I don't believe lawmakers would pass such legislation.