I take it you never saw the video, "Surviving Edged Weapons" before, because if you had, you would certainly see the knife in a new light.
Keep in mind, while both are dangerous weapons, and range will play a part depending on what is being used, the gun is only going to hurt the person when its pointed at them. The knife can be held in a number of positions and still be very effective.
As for the hand to hand expert coming out on top...while we hope that the arts give us an advantage, they do not turn us into invincible supermen. If the 'expert' does not train in a realistic fashion, all that training is going to go right out the window.