I do think there is a strong argument to be made for K/O over S/B as world's alternates (and I say this as more of a fan of S/B): a GP silver carries a lot of weight, as does being defending 4CC champs, and if they do ok, they have more potential to finish high at worlds. In addition, they won the sp and were well on their way to probably winning or at worst, second here, but for one freak mistake. I wouldn't characterize what they did at Nationals as "skating poorly". All that said, I'm less on board with the 4CCs decision. There's less on the line there and I think S/B deserve that reward for their Nationals bronze and pretty good Challenger event performances. But again, it's the same selection criteria and K/O are defending champs...
I have mixed feelings about the Knierims' situation. There are arguments to be made for getting bumped up, decent results on paper including a GP medal of their own this season, but they've clearly been struggling and this nationals was an absolute disaster. If he was/is injured, they should have taken the time to get it taken care of and start fresh next season.