Sandusky “retired” suddenly in 1999. I think Paterno ‘knew’ more than is being admitted about the ‘98 incident.
I think you are right!!!! Paterno decided to kick Sandusky out of his "inner sanctum" but let him remain at the University's "outer sanctum" with emeritus status. So, Sandusky was still able to bring kids onto the campus as recently as last week.
In the Grand Jury Presentment one victim (victim 4 I think) testifies that Sandusky came from a meeting where Paterno told him he would not be the next coach and Sandusky was very upset.
Sandusky retired shortly thereafter.
Also after the 98 incident Sandusky was forbidden from bringing children onto campus. An unenforceable prohibition but one that JoePa surely was aware of.
I believe this supports your thinking about what Joe knew and when.