Why don't most hybrid/comfort bikes have the same "crank forward" design as the Townie in the picture? It looks comfy and should reduce knee injuries. What's the advantage of the regular crank arm position over this forward one?
It isn't that simple. The typical position above and slightly behind the cranks is the result of 100+ years of dialing in optimal riding position. If the "crank forward" position were generally advantageous that's what recreational bikes would have had for the last 50 years, at least.
The position is OK as a plan B for folks who otherwise might not be able or willing to ride, but it comes at a cost of greatly reduced efficiency, increased back strain because of the upright posture which cannot diffuse vertical bumps well.
As far as less knee strain, I doubt it, since leg motion is similar, except that it might prevent you from standing easily and putting your full weight on you knees.
There is no magic here, probably the reason Townie riders have less knee stress (if they do) is probably that they're riding slower, avoiding steep hills (which are murder to climb in this position), and simply not riding as much.
BTW- normally cycling is a low impact sport (lower even than walking) and is easy on the joints. As long as you use the gears properly to manage load when climbing, it should create zero wear and teat on the leg joints. SO if you are having problems, you should consult a doctor or physical therapist to try and discover the actual cause.
A common issue for folks who have feet that naturally point out (opposite of pigeon toed) is the twisting needed to fit on and use narrow pedals. These are often helped with pedal width extenders. I'm not saying these will help everybody, but that if you have joint pain of unknown cause, that you take the time to sort out the cause.