I guess if the house was that well-wired for its time, the K&T might still be in decent shape and you would be justified in leaving it alone, at least on the lighting circuits. The minority of houses I see with K&T had only one or two circuits for years, and no doubt they were overfused for much of that time. The K&T houses I see are one-story and originally had only one lighting fixture per room, and no receptacles. There will generally be receptacles added to the circuit with '50s-era romex. Attic temps routinely reach 140F around here. Rubber insulation is likely to be toasty. I realize it is not like that everywhere.
BTW, how much does asbestos abatement add to the bid? I've never had to handle that!
