Basically if the player intentionally knocks the ball forwards then it is already a penalty. In fact this penalty is better than the knock on as you get a penalty kick instead of a scrum.
12(e)Intentional knock or throw forward. A player must not
intentionally knock the ball forward with hand or arm, nor throw
Sanction: Penalty kick. A penalty try must be awarded if the offence
prevents a try that would probably otherwise have been scored
If you intercept a pass, you must try to catch the ball, you cannot just bat at the ball (up or down).
From games I've watched the interpretation of it being hit instead of an accidental knock on comes down to how far the ball travels. If you "juggle" the ball from one hand to the other then that is considered ok. If the ball moves out of your reach then your not going to be able to catch it unless you bat the ball up in the air giving you time to chase.
If you're "juggling" the ball from one hand to the other then you are considered in posession of the ball and can be tackled.