What if it's very boring and just as he said?
That he's actually Toichi's senior disciple?
He could've known that Toichi was KID and he really could've been ill! He could've realized that KID is now Kaito!
Why did he challenge him? To acquire the midnight crow or to test his senior disciple's son to see if he's ready out of respect for Toichi?
Even though Jii didn't know anyone who referred to Toichi as "senior disciple".