This is entirely wrong. The evidence against G should modify both P(Knox) and P(random peer that is not G) downward.

Proximity should keep P(Knox) > P(random peer) unless there is evidence specific to Knox which lowers her P (i.e. a good alibi).

Your statement about proceeding from the physical evidence and ignoring other things is a heuristic. The fact is that some random suspicious behavior by K is evidence against K, it is just extremely weak evidence. Let R = random suspicious behavior by K. I contend that P(K|R) > P(K|^R). Your arguments that many people do R all the time and are not murderers address the strength of the evidence, but do not address the sign, unless you wish to contend that people who engage in R are less likely or equally likely to be murderers than people who do not. You have made no such argument.

It's clear that the evidence against K should be overwhelmed by the evidence against G, given that no solid connection was established between G and K. But it isn't zero evidence, it is merely very weak evidence.

You have established a safety heuristic to keep yourself from overvaluing weak evidence, but your safety heuristic has it's own shortcomings, because it has caused you to give it zero weight, which is obviously wrong.