I've no problem with the 40,000 number for a few reasons.
First, the Aztecs wrote that number down themselves after the Conquest. They were told to prepare a history of their people and they had no reason to lie because they already knew the disgust in which the Spanish viewed human sacrifice. If anything, they may have understated the numbers involved.
Second, most of us seem to be laboring under the assumption that the temple dedication only lasted for a day, a long weekend, or some other minor amount of time. The dedication process could have taken any amount of time during which slightly different dedication sacrificial ceremonies took place. Once the "magic" number of dedication sacrifices was reached, the "ordinary" or "everyday" sacrificial ceremonies could then be performed on the altars.
The local allies who formed the vast majority of Cortez' army during the conquest of Tenochtitlan performed human sacrifices too and yet you hear little about how "evil", "bloodthirsty", and "savage" they were. The human sacrificial component of Mesoamerican religions was simply used as an excuse by the Spanish and, if it didn't exist, the Spanish would have come up with something else.
Finally, I'd like very much to remind you all out that human sacrifice is a universal human cultural practice and not something confined in time or space to Mesoamerica. Such sacrifices are as old as humanity. Also there are cultural practices that evolved from them and the ideas behind them with us to this day.
Bill
P.S. Obsidian is still used to this day for certain surgical instruments. It's definitely sharp enough to kill. It was how obsidian weapon were used that made the difference in the flower wars-style combat.