Well we have returned from the forbidden Bear Zone of Knife Lake and did not have any problems.  We did see bears on two different occasions on our trip, in broad daylight.  One was on the top of a ridge we paddled by, and as soon as he winded us he was leaving.  The other we saw about 600 feet as the crow flies from where we were camped two nights.  I went out paddling and turned the point we were on to find a bear in the next little bay, he/it was coming down to take a drink out of the lake.  I was down wind of him so he didn't smell me and I paddled up nearly to him, maybe 30 feet away.  He was suspicious but still didn't really know what I was and wasn't scared of me,  I sat in my kayak and yelled at him and swung my paddle around in the air and finally splashed water at him which made him retreat about 15 feet into the brush.  Dan and Mike were at camp so I paddled back and gave them a head's up about the bear before I continued on my way.  They kept an eye on the food packs and had a sling and pile of rocks for ammunition but the bear never approached the camp.  36 hours later we were packing in the morning to leave and I kept hearing a large thing in the brush around camp and saw trees moving un-naturally.  I never saw what it was but think it was the bear, waiting for us to leave so it could come in and investigate the campsite.
Our last evening out we camped near the Birch Lake portage drop-off for the tows from Moose Lake.  A C.O. and a DNR fellow stopped to check our permits, etc. (got a ticket for improperly licensed boats  :-/)  The DNR guy said Ensign Lake has had several bad bear reports recently.