fuck acoustic knock sensors. ion sensing is the way of the future, but that's another story.
You got things minorly inverted freemantle - it does a bandpass filter in order to eliminate the frequency of noise associated with RPM. Above a threshold, bam - retard timing. It's primitive, but works acceptably for low RPM conditions where there isn't a lot of noise.
The problem with acoustic knock sensors is that engine noise increases more or less with the SQUARE of RPM, so your signal/noise ratio deteriorates to shit, even with filtering to focus on the frequencies you care most about. There are ways to get around this, but most of them involve Fourier transforms or other mathematical processes designed to turn the essentially "random" noise from the knock sensor into a series of frequencies with energy associated with them. The energy at a particular frequency is a much better indication of "knock" than anything.
If you start looking into ion sensing, you'll see that the data processing involved is still fairly complicated, but the upside is that there is essentially the same signal/noise ratio at 10000 RPM as 1000 RPM, which can't be said for any acoustical knock solution.
In stock form, the honda knock sensor is useless for anything except a tank of bad gas.