First, is actual neutral present in the switch box? That's a requirement now, so if it's a switch loop you'll need to re-run it with /3 cable.

Now the purpose of grounding is to

• return natural electricity (lightning, ESD doorknob zaps) to its source (earth via the grounding electrode system), and
• return artificial-electricity fault current to its source (via the equipotential bond to neutral back at the transformer).

You've created an island of ground. All it'll do is distribute ESD and fault currents to other places in the island. I talk about the badness of that here.

Easy to fix: Retrofit ground to connect your island to your house's grounding system. In 2014 they liberalized the rules to make it much easier. More on how to do that, here.

First, is actual neutral present in the switch box? That's a requirement now, so if it's a switch loop you'll need to re-run it with /3 cable.

Now the purpose of grounding is to

• return natural electricity (lightning, ESD doorknob zaps) to its source (earth via the grounding electrode system), and
• return artificial-electricity fault current to its source (via the equipotential bond to neutral back at the transformer).

You've created an island of ground. All it'll do is distribute ESD and fault currents to other places in the island. I talk about the badness of that here.

Easy to fix: Retrofit ground to connect your island to your house's grounding system. In 2014 they liberalized the rules to make it much easier. More on how to do that, here.

To answer your questions:

• I agree, this is wire repair, not expansion of the circuit.
• Grounds should be run home as I describe.

Also, whatever circuit(s) are still on knob & tube, slap an AFCI breaker on them. This will trip on any wire arcing, which is the usual problem people worry about with K&T.