Thank you for this tremendously useful insight.
On the one hand it's shocking. A bike builder trashing perfectly good frames (let's be honest, they were bar the odd few early ones) seems insane.
But on the other it's understandable and was probably necessary for contractual reasons; they were made for Kona and Kona no longer wanted them. I'm pretty sure it would have been written into the contract that Altitude couldn't use, rebadge and sell them directly or to others.
The fact you scored one is super-cool, not least because it helps us begin to draw a thin line to when production ended. Of course that's hard since these are the other frames were likely stored in the workshop until such time they were sold/needed.
I've often said that frames painted in a particular Catalogue livery, but with a previous year's Cable Stop arrangement has been due to them being "left over" unsold and stored in a raw state until required - particularly if the frame was an "Outsize". With that in mind regarding the KU, a good example is the bike below, which has 1995 Cable Routing (like CarlosKenneth's 1995) but is wearing full on 1997 Livery.
KU401 (unconfirmed possibly KU101) 20” 1995 cable routing, 1997 decals – Burgundy c/w mainly Blue, but one Yellow decal:
This frame clearly escaped the Forklift treatment!
We never did receive a picture confirming the Serial Number of this frame, but I'm now leaning towards the number KU401 as being correct, rather than my assumption of KU101. I was trying to make it fit the sequence - a frame in the 400's for the 1995 production would surly be far too many, but as CarlosKenneth's is in the 200's, perhaps KU401 is correct.
With regards to the "odd few early ones" with productions issues at Altitude, I think these were restricted to the Hot, rather than the KU - Alignment of the frames using the (new at the time) Reynolds 853 tubing, where Cold Setting is apparently almost impossible; this may have resulted in the 725 Rear Triangle via Reynold's recommendation. Then there are the early design Dropouts snapping on the Hot that resulted in the Investment Cast Socket design. As you say Alasdair, there were very few - only two with the older style Dropouts are documented on the Hot Serial Number List.
Pip