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Benitora gets a regular spear not the Muramasa, and Killer Bee gets to use as many of his swords as he wants. No jutsu's from Killer Bee, and no clones from Benitora. If Killer Bee needs to he can go tailed-mode to get faster he just can't unleash the demon.

Can one of the strongest Naruto characters beat probably the weakest of Demon Eye's 'slaves' in a strict weapons battle?

This is Benitora during the time he fights Taihaku.

Benitora speedblitzes

SDK characters >>>>>>>>>>>>>>>>>>>>>> Naruto characters in speed

I haven't seen anything from Benitora at the point he fights Taihaku to think he's so much faster than any Naruto character. Bon, Akira, and Kyo sure. But Benitora is leagues below them anyway.

Who is Benitora?

http://www.cathiesmith.com/noidea/Characters/Benitora

This is really the only profile I can find. Doesn't really say much about his abilities though.

Kyo speedblitzed a guy who could catch bullets in his teeth in the first chapter, and he had some trouble with Benitora a little bit later when he was stronger - and Benitora got lots of powerups between then and Taihaku

Kyo didn't have trouble against Benitora. Kyo not even trying moved faster than Benitora could really see during the Shogun tournament. I highly doubt Kyoshiro had as much trouble as he made out as having either.

And what upgrades does he get? The only thing he really gets is the Muramasa. Which he's not allowed to use, and he's not allowed to use his clone move or the secret move.

Can Killer Bee do more damage than a Red Mirage?

He gets speed upgrades in practically every fight he's in - as does basically every other SDK character.

Seriously, they get speed upgrades every volume - literally.