We have Knutsen experts in the crowd...I'm not one of them so I'll pass on speculating about that.
I can't see anything in the photos to indicate that it wouldn't be restorable, but there's a lot I can't see. For instance, I can see that one back brace is loose; how many others are, I wonder. How many top braces are loose? No indication of what kind of shape the neck is in, other than it "needs to be re-glued". Be nice to know if it also will need any neck-straightening; I always assume extensive fretwork is likely on something like this, but maybe you'd get lucky.
No real indication of whether the top cracks (and I see a lot of them) are loose/open, repaired at any point in the past or all in need of repair. The back crack looks like the back seam/glue joint gave way, but then followed the grain off the joint, possibly from impact of some kind that also knocked that brace loose.
I see separation of the back from the side, can't tell how much. If that's extensive and the glue is simply giving up, the back may need to be removed and reglued, which would make repairing the top cracks easier, at least. Looks like there's no back binding (one of you Knutsen folks will know if that's standard or likely on a Knutsen), which also makes removing the back easier to deal with ( a lot!).
But I don't see any really grave, unrepairable stuff. I wouldn't doubt that you could spend a couple grand getting it into good playing shape; possibly a lot more, depending.....
I like the looks of it; the top looks nice, what I can see, and overall it has a look of solid-ness that may be completely my imagination (I've got an active one!). If it is a Knutsen, and you want a Knutsen, and you have the $ to toss at it, I'd say it sounds like a nice adventure! If what you really want is a nice-sounding, nice-playing harp guitar, there are a lot of folks making those these days.....
Have fun, whatever you do!