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As long as the knots in pine are tight, they should not be a problem while turning, just make sure you tools are sharp and watch the grain direction. The loose or black knots are a problem and can be dangerous since they are loose and could come flying out. All knots will become a problem when painting the wood as they will bleed.
Try using pallets, I have found them made of poplar, birch, maple, purple heart and rose wood (once).
The only real difference between cheap tools and expensive ones is how often you have to sharpen. One of my favorite chisels is a cheap carbon steel 3/4 shallow spindle gouge. I do end up sharpening it quite often.
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