I didn't think a bad knock sensor would set off a CEL. Might be worth checking your factory service manual at
www.nicoclub.com/FSM/ to make sure that's your issue.
You're loosing performance, but I don't think you're risking engine damage by putting the repair off. The ECU will put the timing into a worst-case-scenario map to protect the engine, so it's behaving as if it's hearing knock through the sensor.
I have no idea if it will pass your state inspection with the light on... we don't have inspections in SC. My understanding is that most states automatically fail you if the CEL is on, but I don't know for sure about your state.
The part itself is about $100 each. You have two of them, and typically want to replace the subharness and a whole bunch of other hoses while you're in there. I suspect a decent shop would charge you somewhere in the $800 - $1500 range to get it done properly. Where are you located?
There are several threads here on replacing it DIY if you're intertested in going that route...
Heath