I've never played any FF, outside of FFTA, and bits of FF 1&2 for the GBA (any idea if thats the original FF1&2, or the american? I can never remember)
So I've never come across any 'prevent sleep', only wake-up effects.
The power of the 'shadow' sword is to make itself into the sword that it fights. (I know I didn't make this clear) It does not end up as a combination of 'this sword, that sword' etc. It becomes the weapon that faced it, until such a time as the power is released.
By the book, its a case of as the two weapons met, the original lose all its power, while the 'shadow' became the original, but when you say 'can only be blocked by one another, do you mean they pass though others, or move around?
If the latter, by the nature of the swords, the 'shadow' has no effect, if the former, it's grounds for a duel with each fighter wielding one of the pair, though one of them will be holding a regular sword now..
So in your example it would end as a duel between the two fighters, one each armed with one of the pair.