I don't know about 850s, but I have read that in a 1990 7 series Volvo with the Regina ignition, the first thing that the engine management system does when a knock is sensed is to increase fuel to the engine.

It was said that this cools the combustion chambers and is quicker than changing the timing of the engine. The write-up did not say how long the fuel increase goes on after the knocking stops. I read the same thing in Road & Track a couple of years ago.

I found this explanation after our 4996 mile trip from Massachusetts to Saskatchewan to visit my daughter when she worked for Ducks Unlimited.

We drove our 1990 745 GLE 4996 miles in two weeks! (We spent Saturday and Sunday at my daughter's place in Foam Lakes.) BTW - Volvo seats are great!

I recorded all fuel purchases and our mileage was almost always 29.5 for each tank, except for one tank full that was 27 even when I filled up from a pump that I misread and used regular.

I think that high mileage cars need high octane more than new cars because of carbon build up, etc. I, too, do not think that it is a good idea to rely on your anti-knock sensor to keep your car safe while using lower octane than is recommended for your car.
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'96 855R,'64 PV544 driver, '67 P1800 basket case, '95 855, '95 854, the first three are mine, heh, heh, 435,000 miles put on 9 bricks