reducing oil is no issue. toyota has clearly mentioned in owners manual that reducing 1L oil/1000 km is normal specially in a very high compression 2SZ FE engine.
Which oil are u using?
Knocking is most common with 2SZ FE since it has more compression than 660 CC and honda 1.5 turbo engine. Its due to bad quality fuel.
I have the same car with same engine. you can further discuss over call if u feel like.
Regards,
Hasnain
03335120067