There is lots of good info about the knock sensor in the FAQ's. Not sure which system you have but it sounds like only the Chrysler system could be fooled by mechanical noise.

I too have been experiencing low fuel mileage, found my O2 sensor stuck on .9V, replaced it and AMM and the O2 sensor began to do cross counts.(.1V-.9V) Still mileage was a bit low but it's been very hot in Memphis (100*+) so AC and thermo-fan running are combining to keep MPG's down.

For grins pulled the plugs (25,000 mi) cleaned and regapped and the last two tanks indicate about 2 mpg increase. (around 24 mpg)

Also trying Shell gasoline, swapped in a set of newer, cleaned and tested injectors, cleaned throttle body, replaced the intake gaskets. Will be keeping a close watch on MPG's.

You can also build an LED tester (similar to Volvo 5280) that will test your knock sensor and coolant temp sensor plus a couple other items. See the FAQ's.

Piston slap: I have 468,000 miles (333,000 of my own after my rebuild)and it's still slapping away although I would not be surprised if a skirt might fracture at some point?