Why no Knuckles in Sonic 1?

When Sonic 1 is locked on to the Sonic & Knuckles cartridge, rather than producing "Knuckles in Sonic 1" as one might expect, we are instead shown the following screen:

Of course, this is actually a splash screen for the "Blue Sphere" bonus game, but more to the point, it suggests there is NO WAY to combine the two games into one, as was previously done with Sonic 2. Is there a technical reason for this?

Takashi Iizuka, senior game designer for Sonic 3 and Sonic & Knuckles, says it's because Sonic 1's level design wasn't conductive to using Knuckles' abilities:

We realized that the construction of the world was really made for [Sonic] and when you started putting other characters into that world, it didn't really work [...] we didn't want people to have a bad experience, so we put them into the special stages.

For Sonic 2, the maps were made so that when you fly around as Super Sonic, you can fly around pretty easily [...] The maps are pretty tall in construction, so because of that we were able to fit Knuckles in and play around with him.

He's not wrong, but I still find that a flimsy excuse. After all, the levels in Sonic 2 are at times not very conductive either, but the developers found a way to work around those issues regardless. Yes, the presence of Super Sonic was a major catalyst in making Knuckles in Sonic 2 possible, but not in the manner described.

I mentioned before how in Sonic 2, the blue colors in the player palette aren't safe for use by anything other than Sonic, because when Sonic turns into Super Sonic, anything using those colors will also start glowing bright yellow.

Super Sonic didn't exist in Sonic 1, though, and as it turns out, quite a few different objects make use of the blue colors, including bumpers, buttons, item boxes and almost every kind of enemy. When Knuckles is introduced to the game, his palette corrupts the appearance of all these objects.

In particular, both Spring Yard Zone and the special stage contain level blocks which are rendered using more than one palette while sharing the same art. The visual integrity of these elements is completely destroyed once the uniform blue gradient is replaced by three shades of red and one shade of green.

So apart from the palette, are there any other issues? Not really. Back in September 2005, Stealth, aka Simon Thomley of Sonic Mania fame, released his Knuckles in Sonic 1 hack, which was considered the "Holy Grail of ROM Hacking" at the time and one of the first ROM hacks to be made through use of a split disassembly.

In this hack, Stealth avoids the palette issues entirely by coercing Knuckles' sprites into the Sonic 1 palette, rather than the other way around. The result is that while Knuckles looks a bit off, the rest of the game remains safely unaltered.

It doesn't even crash when you glide into a conveyor belt!

As a final note, since Stealth ported the Knuckles object from Knuckles in Sonic 2, the same behavioral quirks from the Sonic 2 object are present in this hack. These quirks would later carry over to the Sonic 1 and Sonic 2 mobile remakes, as Stealth would base the Retro Engine implementation on his tested, well-documented code from ten years prior.