Well... Here's the kicker.
The knock sensor isn't just an on/off thing. It is in essence a microphone. As you might imagine, there's a lot of noise while the engine is running. The ECU filters that noise for certain frequencies, which mean "knock" and reacts accordingly.
I also looked into this, and got as far as designing the circuit, but without knowing the exact frequencies that the ECU is looking for, and without the patience to go through trial and error for sending signals to the ECU and watching when it retards timing, I abandonded the project in it's theoretical phase.
The project was in essence a 4th order bandpass filter, (With the design being identical to that used for an audio graphic equalizer) with a comparator to trigger when the "volume" of the filtered input rose beyond a trigger point. That was in turn passed to a monostable multivibrator circuit so that the light would stay on for at least a full second after the event, giving the driver time to see that it had occured. (Actual knock happening for this long is kinda bad, and I don't like lights flashing at me for a few milliseconds at a time.)
If you can get the frequency and voltage range, then the parts list to build this would be about $35. Probably about $22 each if you made 10. This assumes that you are capable of etching your own printed circuit boards, or are willing to bread-board the bandpass filter circuit, as well as determine the typical output voltage (for comparison purposes) of the knock sensor. (More expensive on bread-board, and less reliable.) Even then, there's zero guarantee that the results from the detector are always going to match what the ECU gets, since it's "listening" to two sensors.
Another alternative is to use an extra knock sensor entirely, say, in the boss for the 7M-GE version (Or, if you have a 7M-GE, in one of the two bosses for the 7M-GTE) but this raises the cost of the project to within the range of commercially available offerings.
Oh, and to determine what resistor you need for an LED, you have to know something about the LED that you're dealing with. The LED will be rated for a forward voltage (Vf) and current rating. You need AT LEAST the Vf in order to make it work at all. (Generally not a problem with a 12V environment.) You then choose a resistor which will keep the amount of current in the circuit below the current limit of the LED, but above the turn-on threshold.
It's easy enough to find design information on all of the circuit components that I mentioned, though there are certainly "gotchas" with actually getting the signal TO the circuit board, so if you don't already know something about signal processing, this is NOT the project to learn with.
tl;dr: Way easier and possibly cheaper to buy than make.
