Thanks all. I went to the doctor. Knee issue was probably unrelated to seat height (though I may still lower slightly) and more likely from kneeling to work on bike!

My own Google diagnosis (based on pregnant appearance of knee) was correct. Now using pillow to kneel until I can afford good stand (maybe will try some pads!). I had an Xray which also showed very slight, normal-for-my-age arthritis.

The knee swelling was an unsightly thing called prepatellar bursitis - with no pain - only mild discomfort due to swelling - the doctor stuck a needle in and drained a few ounces of blood-tinged fluid into a syringe, and injected a steroid using same needle, so only needed needle to go in once, looking better now. Ideally the fluid would have been straw color synovial fluid, blood indicates trauma which I don't recall, except for kneeling, which can inflame the bursa to react and cause fluid buildup and an inflammatory response, strange.