Go big or go home. I don't know the best approach but having remodeled a similar aged house, you can't do any updates to appliances, HVAC, etc. without updating electrical. Don't piecemeal it. We lucked out in that it turned out the house had no wall insulation so it was easy to run new wiring in the walls. We added insulation later.

Add outlets to code, move switches to where you need them when you do the work. No one wants to come back for a small job these days. Over plan the circuit breaker box's capacity for future growth.

Thanks, I appreciate this. Had just decided to go forward and it helps to feel like we're doing the right thing.

There is no reason knob and tube wiring can't be abandoned in the walls as long as it's disconnected at the breaker panel. Whoever told you it was necessary to make a bunch of holes in your walls to remove the old knob and tube wiring, and that this would be "better," is a weasel trying to run up his bill. Go with someone else who won't gouge you. If you think it's dangerous to not remove the old wiring, just google "abandon knob and tube wiring" and you'll see that this is a standard, widely-followed practice.

get it done right

sometimes having it 25% done is even more annoying that it all being knob and tube

so many times ive seen romex feeding a juction box and knob and tube diving down into all the walls.

besides the wiring not being grounded, its 100 years old. it has a cloth insolation on the wire that breaks down over time. its worth the money to upgrade the service if its old and have all the old wire replaced.

We have old, disconnected knob and tube wires in our basement, in crawl spaces and other unseen places. I don't know if some is still in our walls. Some of it is pretty scary-looking, a fire waiting to happen if it actually was live. Our house was built in 1910, so pretty much the same vintage as yours. Pulling/fishing wire through walls is a royal pain, Hard to see what's blocking the new wire your are trying to run through tge wall. . Old knob and tube in the walls and in your way may be the reason the electrician preferred to remove it.

Sigrid- It may sometimes help to use old knob and tube wiring to pull new romex cable but it typically is not "in the way" in the sense it makes new wiring more difficult. I still think someone who wants to bust open walls to remove all the old knob and tube wiring is either incompetent or a huckster.