The expression “knowledge is power” isn’t confused in and of itself; I agree that knowledge can be powerful. The confusion arises because, in most instances, the speaker seems to think that’s the end of the story, as if the single-minded acquisition of knowledge or power is all that matters, as if that acquisition of knowledge or power makes one more powerful. Nothing could be further from the truth.
Without the wisdom to use it appropriately—how to use it and when to use it and why—having lots of power can be much worse than having no power at all, because it may be the power to blow yourself up, or (even worse) the power to blow up your friends, your neighbourhood, or your planet.
No one thinks a little boy with a big shotgun is powerful, for instance; everyone thinks he’s a danger, and as much to himself as to anyone else. But the same shotgun in the hands of a hunter is a powerful tool, because presumably the hunter has the wisdom to use it well.
By itself, knowledge is interesting at best and dangerous at worst. Knowledge is power in any good or useful sense of the term only when it’s governed by wisdom.