How to fix Knuckles in two (2) easy steps:
>make it so Tikal continues living at the end of SA1
>make it so the Master Emerald needs to stay on the ARK to prevent it from falling again at the end of SA2
That's it. Knuckles gets laid and isn't tethered to a stupid rock that doesn't do anything anymore. Now he's the cool big bro who gets pussy instead of the weird hangeron with nothing better to do.