1 inch punch being a knock out hit? probably difficult
however, short power is definitely something that can inflict damage and more than just a technique to create distance. Its a development of strength that the Chinese would call "ging." The power generation is something difficult to describe but it focuses lots of power into a small movement, whether it be a punch or a pulling of a hand. If "ging" is incorporated into my short distance punch then someone who is in a bad position will probably fly themselves off a few feet. If I pulled the guy then he'll fly in the other direction.

The strength that Bruce Lee demonstrated does not only translate into a 1 inch punch, but to many other movements as well. And the 1 inch punch still can deliver a powerful blow, especially if you can aim it to sensitive areas of the body (neck, ribs, pressure points, etc). Sure it may not knock someone out, but it'll definitely hurt. I say this confidently after feeling the short power of some of the people that train Southern Praying Mantis with me. Definitely wouldn't want to be on the recieving end.

Also short power allows you to move about faster, per say, because of the lesser distance your fist would need to travel compared to regular, non-short power. This would be ideal, it takes lots and lots of work to get that kind of power.
"you're going to work till you wish you were dead and then keep going.." -Sgt Slaughter