Typically, a service upgrade also invokes other changes. 2 SABCs, dedicated circuits where required, 20a bath, GFIs where required, seperate range & AC (something done quire frequently in old fused services), furnace & sump seperated, ground lights in bathrooms, front & rear exterior recept, etc. If there's any ungrounded recep circuits, either GFI & label them or install 2-slots. The inspectors are pretty reasonable when it comes to upgrades. They realized that not everyone can afford to tear out all their drywall and/or plaster & lath, so some things just don't get done.
But still, what the HO is left with a far safer home than before. Besides, I have yet to see a knob & tube MWBC.[/QUOTE]
That is surprizing to me, most all the K&T that I come across is MWBC from the panel then it breaks to 2 wire as it runs through the house. No way you could just put a arc fault at the panel and be done.