The "air gap" theory is a myth.
The size of wire used for K&T is the same as for modern wire, plus the joints are better.

The real issues are that most knob and tube are undersized for the need, so many people upsized the fuses.  Rest assured if you have 12 gauge wire and a 20 amp fuse, you're fine.  If you have 14 gauge wire and a 15 amp fuse you're fine.

From Home Energy Magazine '[Knob and Tube Not a Fire Hazard][1]':

> Legislation was enacted in Washington state to allow insulating over
> knob-and-tube wiring per Bonneville Power Administration (BPA)
> specifications. This resulted because there were no documented cases
> of a fire being caused by knob-and-tube wiring, whether insulation
> covered it or not.


See also https://diy.stackexchange.com/a/20279/5960

K&T has huge advantages when it comes to driven staples and nails, and fire.  It has theoretical downsides if blown in insulation gets wet.  K&T wire insulation varies in quality from great to really bad -- but fortunately the K&T system does not require wire insulation.






  [1]: http://www.homeenergy.org/show/article/nav/letters/page/10/id/1202