So I guess I will bite?
I feel like you are being pretty unfair here.
1. All electrical lines are just waiting for something to close the circuit and it will arc, it's how it works. K&T is spaced about a foot apart generally. Romex is right next to each other.
To create a closed circuit with Romex, one would have to penetrate the outside layer and also penetrate the line wire's insulation and also form a circuit to the ground. This would require a knife or a nail hitting it exactly the wrong way. To create a closed circuit with K&T, just touch it, lay a board over it, let it stretch with thermal expansion and contraction until it touches lumber, set a box on it, add insulation, or whatever. If it is fabric-wrapped, the 80 y/o fabric will likely disintegrate.
2. Animals can chew on romex too
If an animal walks across K&T, they can close a circuit with their paws and tail, catch on fire, etc. Ask me about the petrified shell of a cat I found in the attic of the K&T house I redid, lol.
3. Higher Amperage? In what? Lights are 1/10 of what they used to be, Most major appliances use way less junice than they used too. Yes a K&T 240 votlts for an eclectic dryer would be a bad idea, as well as a hairdryer in a bathroom.
A house with K&T was built to handle the amperage of an 1880's-1940's household, and that meant no dishwasher, TV, washer, dryer, computers/monitors, christmas lights, stereo, steam mop, etc. A refrigerator, maybe 10 incandescent light bulbs, and perhaps a vacuum were the use cases. They did not anticipate space heaters, air conditioners, etc.
4. There is a reason many houses burnt down in the day. But it is not knob and tube, it's running six fireplaces every day, its heating with coal, its using open flame for light, its lack of smoke detectors, and everyone was constantly smoking.
In today's world, electric issues are the 3rd leading cause of house fires. That's with the vast majority of homes having electrical systems that are much less likely to catch on fire. Google is not forthcoming on how the odds of an average house burning down has changed over time, but I can only assume that as one increases each risk independently one multiplies the fire risk. The risks listed above certainly contributed, but K&T contributed as well. Otherwise better techniques would never have been invented and people would not be willing to pay extra for the better materials.
5. Lots of houses have K&T but also have insurance, they are no mutually exclusive.
They also pay higher rates and have fewer insurance companies that will cover them. At some point, one must think about the K&T wiring as a liability that costs hundreds of dollars per year extra in insurance, but will also cost thousands of dollars to replace (if you pay someone to do it for you). It's kind of like the effect on utility bills of a leaky pipe or a window with a broken pane. As time goes on, I would expect the options to dwindle for K&T homes.
At some point, when a circuit or box must be replaced or when the system needs to be expanded, the electricians will explain that they cannot tie into or modify a K&T system, and at that point the homeowner will be stuck with the options of doing without electricity or paying for a full house up-to-code upgrade. It's a financial and fire liability that will continue to cost, one way or another, until and unless it is replaced.
