Knights do get a huge boost in Chapter 4 with Excalibur since Auto-Haste is so godly, but they're obsolete even then if you're using Excalibur on Ramza or any other special character. I'm probably a bit biased in even noticing this since I only play challenge runs. The Knight class would have been a lot better or at least have its own niche if there was a defense stat in the game, I think. It's likely they had one and removed it during development, but it was too late to save the Knight class. I agree that Dragoons basically do their job better.
To me, the overall problem with FFT's balance is that you basically have to use self-imposed limitations or mods to make the game interesting after a playthrough or two (or even reading guides for that matter) since once you know about them there's no reason not to use Math Skill or Martial Arts Ninjas to murder everything, grinding requirement aside. I mean, even just knowing that you can hire a 70 faith female character and make her a Wizard to do tons of damage early makes the game supremely easier. So it's a 'hard' game for people new to it, but very easy once you have done research on the game. I got a lot of replay value out of doing silly challenges, but after over a decade of hindsight, it's hard for me to say the game is well-balanced. It feels really obtuse for new players but doesn't give veterans much of a challenge on its own.
A perfect example of this disparity is the Oracle class. Every time I read forum threads about the worst classes, I'll see some people say the Oracle is useless, but it's virtually a guarantee anyone saying that hasn't used this class to its full extent since Yin-Yang is probably one of the most broken spell sets in the game and sticks are magnificent weapons for mages. However, it's unlikely that the average player is going to learn this since you have to go out of your way to experiment and get that knowledge, which the game doesn't do a great job encouraging by barely having any of certain classes represented by enemy teams, hiding spells behind JP walls, and handing you characters like Orlandu.