I'm terribly late to this discussion, but....
I suppose whether or not you find Michele Lee "right" in her assumption that KNOTS just wasn't KNOTS without Karen will rely on whether or not you like Karen and find her essential to the show and its storylines. I know Karen has her fans, and by extension so does Michele Lee, but as with any actor or character on a show, Karen also has her detractors. I can't remember where, maybe it was in one of these forums or perhaps on another one, but I specifically recall a fan writing about how they didn't like Karen at all. Their argument was she was too goody-goody, too nosy, and that her storylines seemed "fitted into" storylines already written. I can sort of see their argument, but then I can't at the same time.
I'll go on the record as a fan of Michele Lee and of Karen, but I can admit that I would've been perfectly fine had she missed some episodes along the way, especially in Season 14. Maybe I'm not as big of a fan as some, but the rotating cast method they used for budgetary reasons in the final season didn't really bother me. The show still flowed -- for the most part -- and I still felt like every story and character had adequate time. You can almost see how the writers go out of their way to make sure they include Karen in all nineteen episodes for the final season. Karen's side-plot of going to visit Diana wasn't necessary and it provided absolutely nothing other than a unwanted cameo from Claudia Lonow.
But, to each their own.