Several possible solutions.
1. saw off that inch and shorten the bow, remove the problem, rather than fixing it!
2. Leave extra width around it as a feature bulge. Clean out any manky wood on the belly and fill with plug or epoxy/yew dust. There shouldn't be too much force on it that close to the nock.
3. Saw out a V removing the knot and glue in a matching piece of Yew. Like a V splice.
4. drill out the knot and fill, then flatten the back and add an overlay of clean sapwood, nicely feathered into the back, say 4" or so long.
I've done all of the above
Del