A.Rex Cauldwell responds: You're right; it isn't safe. The reason is that knob-and-tube wiring is designed for open-air heat dissipation. That means there cannot be insulation around the wires, which would be the case if you blew cellulose into the wall cavities.
The same applies for knob-and-tube wiring in the attic or between floor joists. You shouldn't have any insulation around the wiring — not even fiberglass.
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