The "effective distance" is twice the actual crank length difference.
The shorter crank means you raise the seat up by that amount to set the proper height for the "down" crank. Since the "up" crank is also that much shorter, the seat is now twice as much higher over the "up" crank.

For MY knees, the difference was amazing for the reasons I suspect as in my original post. My knees were simply beyond the limits of "free" movement and basically "binding" at the top of the stroke!
You do lose "torque", but you go to a lower gear and SPIN to make up the difference. I'm maybe spinning around 75 RPM, which is still considered "slow", but it was a large % increase for me. My STAMINA is so much better, I've already ridden more miles this month than last! (It has to something to do with lactic acid build up in the legs? as I understand it)

I posted this in the +50 forum for a reason. There is most likely, more people with bad knees here! If I thought my "revelation" would have applied to ANY of the other forums, I would have posted it there!

I'm not claiming shorter cranks are the solution for everybody! I just know they have helped me to a degree I would not have imagined. If someone told me they would make that much of a difference to me, I would probably told them they were full of it!

I'm convinced enough, that I ordered 165's! I totally expect that there is a point of "diminishing returns", but I'm going to take the next step toward shorter cranks. With my monetary situation, this IS a major investment. Hopefully I won't be disappointed.
One problem, is I'll be changing more than one thing at a time. I'll have to go back to my original 26-36-46 rings, from the Bio Pace 28-38-48 I'm using now. I do have a 28-38-48 "round" ring set in the "junk pile" off an Xmart bike I'd forgotten about. I could also try that, but I'm not sure how much I want to "cheapen" my bike! Maybe they'll end up on my "back up" bike and I can sell my nicer 175's and recoup a bit of my outlay?