Never thought of that. The characteristic of Knotty pine is the many knots and the more the better, so, I may be wrong, but I think there is only one. I have never seen any thing other that number 2.
However, you do not want to pick any boards with the knots already fallen out. They will do this anyway and some might need to be filled in with the same color putty. You do have to be careful with them.
When fastening, I would predrill all holes that require fasteners that are remotely close to a knot, the vibrations will cause the knot to become loose and fall out.
Now, the sealer to use will definately be an oil polyurethane since you stated, "you like that amber color". Oil poly does give that yellowish color ad water based will leave the natural color.
After several coats, drying time between about a day depending on humidity, the coatings will hold the knots together and in place. You might consider applying a sand sealer or wood conditioner before application of the poly.
Sounds like fun and what a beautiful room this will yeild.