I've had it happen, and I just keep on going. With that said, most of my projects have been "practical" ones and very simple. For example, scarves and lapghans. I figure that even though I was giving them as gifts they were going to get a lot of use but not to the point where the knot was going to make them an embarrasment to use (how much do you care if there's one of those knots when you're cuddled under the blanket on the couch?
) Also, sometimes it kinda ends up more on the wrong side of the work so it's not so noticeable on the front (if that makes sense).
Now, if I was making a sweater or something like that I'd do the cut and knit. I think it all depends on how much the knot is going to bother you.
I've also run into places in the skein where it looks like there's a giant hairball (for lack of a better term)....that bugs me more than the knots do.