He was probably trying the O2 Sims in an attempt to trick the ECU into thinking it still had the cat convertors installed. The ECU monitors the voltage sweep on the secondary O2 sensors and compares that sweep to the primaries to determine if the catalyst is still functioning as expected. If it finds things out of whack it will retard timing and add fuel in attempts to clean up things. Was really only a problem with 05+ ECUs. 03-04 were a lot less stringent.
Chances are the trickery didn't work and he found the flag that disables the secondary O2 monitoring.
As far as the knock sensors being triggered by the blower, I guess its possible, but chances are the ECU was actually seeing real detonation. Part of the reflash should've included adjusting the knock sensitivity to account for false knock frequencies. I'm guessing he didn't want to or didn't know how to mess with that so he just turned them off and used meth injection to keep it from detonating.
Makes sense on the O2 simulators. I've never had a converter code on my car, and it's been catless since 2004. He had me test those simulators in about 2006, so he was probably starting to run into issues on the '05 cars.
Rear O2 simulators are a thing on other platforms, both the defouler and the electronic variety. I successfully ran defoulers on my nitrous 2003 Crown Vic.
I know the small block Chevy guys were having issues with noisy cam gear drives tripping knock sensors. Who knows if that's what TC was talking about, or if he actually saw it happen on one of his builds. I plan to put it on the dyno and see for myself what happens. Either way, I wouldn't be surprised if TC turned off knock retard altogether. He certainly did dumber things.