the problem with knock is that detonation is extremely full of variables, including combustion temperature, fuel condition, combustion chamber deposits.. and there is NO way for the ecm to have an accurate picture of these variables to make finite timing adjustments.
'perfect' timing one day might not be 'perfect' the next. the knock sensor allows you to run more aggressive timing than could be safely achieved through pure tuning. it allows you to run timing really close to the limit, and if one day you get shitty fuel, you wont hear that awesome 'tick tick clatter boom'
of course on a decent build with forged pistons and strong rods, i'd say a small amount of 'ticking' detonation is allowable in some conditions. they don't blow as easily as cast hypereutetics do. but i still wouldnt' do it.
carbed engines? well, they either dont have the precise timing advantages of a fuel injected engine.. they back their AFR or timing off to a safer level
either that or they are pure track cars, running in measured conditions, and running race fuel with a garunteed octane level, and are expected to be rebuilt at intervals anyway
dont delete the KS. dont get a gear drive, it's a mistake. call lunati and tell them their timing set is slacking off on you. they're a reputable company, they should provide you with some sort of solution.. and their timing sets aren't bad, i'm not sure why yours is giving you greif..