I agree that this seems to be a media-contrived showdown rather than a real attempt to take on World of Color. Everyone who says Knott's shouldn't take on Disney at their own game should look again, and they'll see that they're not. This looks to me like a very Knott's-scale attraction, the sort of thing I'd expect from them (for better or worse). It seems to me that this is just an opportunity to do something new with the Peanuts license, create something to keep people in the park later so they'll spend more money, and give them something to walk around while digesting their chicken dinners.
I haven't been to Knott's in a long time (I've stopped to eat there, but haven't been in the park in well over ten years). But this, in combination with the various discounts they've been offering, would encourage me to drop in one of these days. Of course, it helps that I'm a huge Peanuts fan.