I also tried deleting .kde/share/apps/knotes. Upon next login, knotes still spawned a new [Display] note (but only one, instead of dozens). Changing the preferences as to default width and text font doesn't have an effect, either; I can see the correct changes are saved to .kde/config/knotesrc, but they aren't being used when creating new notes.
This bug renders the package unusable, and has been fixed in upstream for a month. Can someone /please/ rebuild the package?