First his motor isn't a high compression motor so 87 is fine.
Second all the knock sensor does is retards the timing. The knock sensor is basiclly just an ear on the motor listening for detonation.
Third timing doesn't change the compression ratio. Timing is just when the spark plug fires. Whether it fires earleier or later it still fires. And gas is high flamable to whether it's 87 or 110 it's still going to fire. Detonation or knock is when it does prematurly because of like you said a high compression ratio and too low of octane or hotspots in the cylinder from carbon deposits or the wrong plug heat range.

 

Update FIXED sort of: I took my truck to Autozone to have a Diagnostic done on Friday. 7 hours later all they could only tell me that my compression was good, it had good gas pressure, and to go to the dealership because there not sure what the cause was. Luckly i wasn't charged!!! I'm not sure what they did because when I picked up my truck the missfiring was gone. Then shortly after driving the truck the check engine light turned off. I'm leaning toward a bad fuel enjector that was causing the problem and will replace them next if the problem comes back.

Actually on my 96 I have a distributor not a coil pack. I hardly ever pull anything with my truck. I pretty much only use 87 octane gas.

 

Autozone does compression and fuel pressure checks or did I read it wrong?

 

You may want to get your computer reset, on 96 and newer even if it goes off it will still store the code and show up next time you have it checked.

 

I made to many trips to Autozone last week it must have been on my mind when I was writing the message. I took the my truck to Firestone.