Rules Knowledge is important, but I've never found it to be a make-or-break quality of a GM. If the story is uninteresting, no amount of technical proficiency is going to make up for it (unless I'm just there to steal mechanical ideas). If the story's good, I can forgive imperfections.
Thing is, Rules is the part of the game you get better at the quickest. If you play D&D, you start learning the rules. You screw up a a wizard battle, you'll have the next one down better, and better after that. All the other things GM's have to do (play characters, improv, come up with plots, settings, descriptions, and so on) are on a slower curve.
I think its okay for the GM to know less rules than the players as long as the players are honest, helpful, and willing to sit back and let the GM run the game, even if its not by-the-book.
Thing is, Rules is the part of the game you get better at the quickest. If you play D&D, you start learning the rules. You screw up a a wizard battle, you'll have the next one down better, and better after that. All the other things GM's have to do (play characters, improv, come up with plots, settings, descriptions, and so on) are on a slower curve.
I think its okay for the GM to know less rules than the players as long as the players are honest, helpful, and willing to sit back and let the GM run the game, even if its not by-the-book.