look at Rebekah Younger's work. a couple of things that intrigued my about her techniques:
first: notice the "color discharge" technique that she uses. this is the same thing i described doing once to t-shirts with Sunlight (tm) dishwashing gel. i don't think i'm brave enough to do it to something i knitted.
second: i was interested by the technique she describes of knitting up panels, hand-painting them in gradients, unraveling them and then knitting them again using fair-isle techniques. labor intensive certainly. perhaps a knitting machine is involved in the proto-knitting stage. anyway, some interesting results. check it out.