http://en.wikipedia.org/wiki/Exhaust_gas_recirculationfirst off the EGR has absolutly ZERO to do with knock prevention. The EGR does not function at WOT or at idle and only at partial throttle during cruising speeds. Adding a little atmospheric air at light cruising speeds will not hurt the engine unless its unfiltered. Also an EGR does in fact meter air to a certain extent it knows when there is flow through it. On top of all this the ECU does compensate for what is ingested through the EGR. You forget there is a O2 sensor placed in the manifold that tells the ECU what the engine is ejecting and compensates accordingly. All exhaust is not created equal so the O2 still has to compensate whether its fresh air or exhaust air. All in all the only thing an EGR is good for is to cut down on NOx during light throttle/cruising speeds (ie what people drive at most of the time)...
The best way i have heard this put is you wouldnt stick a hose up your butt and plumb it to your nostril would you? why would you make your engine do the same.
Yes, the EGR is primarily an emissions-reducing device. It does, however, serve other purposes (such as reducing combustions temperatures, which, if too high, can lead to detonation). Yes, the ECU relies on the primary O2 sensor readings but it also works in conjunction with the MAF, which reads the amount of air entering the engine. If the ECU could work solely off the primary O2 sensor there wouldn't be any "System too lean" codes thrown due to vacuum leaks.
Also, the EGR does not "meter" in a controlling sense in that the flow is only metered based on the flow velocity and the diameter of the hose. The only "intelligent" thing about the EGR system is the EGR boost sensor which reads changes in vacuum to determine whether the EGR valve is open or not.
Still, the one fact everyone keeps forgetting is that there is NO proof that removing the EGR valve and/or plugging the line has any appreciable positive effects other than cleaning up the engine bay. There's simply no reason to remove it.