The reason the LS2 style sensors "dont/won't" work on an LS1 based system is because the LS1 PCM is not designed to work that way. The LS1 KS's are a single wire broadband sensor that the PCM sends a certain amount of voltage to, as the sensor detects knock, it changes the voltage reading and the PCM then knows how much knock is present by the amount of feedback voltage change.
The LS2 sensors on the other hand, are what is known as a two wire "flat response" sensor. These style knock sensors actually send an AC voltage signal (similar to a wheel speed sensor) back to the PCM to record knock, no voltage "from" the PCM is needed, they create their own. The newer PCMs are also capable of learning and determining from the flat response sensors what is normal and what is not.
So, to me anyway, it's pretty much black and white why an LS2 style sensor cannot be used on an LS1 system.