There may be yet another explanation for this little mystery. Paul Mertz (who indeed seems to be the only source for the entire episode, both with Phil Evans and Jim Grover) told Grover that Eddie King had commented, "You know, he doesn't play the kind of jazz trumpet we in Victor records want, and hate to disappoint, but we just don't want anybody like that, we like the Busse type of jazz." And, says Mertz, they could record the tune with a Bix solo "only on the condition that we make an alternate with Freddie Farrar, our fine first trumpet player, playing a hot chorus in the Busse style" (which by the way sounds quite different from "take 'im off, he thundered to Horvath", from Sudhalter/Evans. Is Mertz documented anywhere to have given this quote?)
Now in the retained take 2 of I Didn't Know, we have 16 bars of Bix displaying his tone, attack, timing and style beautifully. And yet on the same record, there IS a 12-bar chorus of Freddie Farrar playing in the "Busse style" - to be precise, in the dixieland ensemble after Venuti's verse. Farrar leads, Murray does his thing on clarinet and either Dorsey or Rank provides the trombone counterpoint. Now could it be that this 12-bar intermezzo was intended to be led by Bix, and was then taken away from him to be played by Farrar? Thus, Victor would have had their recording (which I still believe got rejected for its slightly "defective" 1st chorus), Farrar would have played in the Busse style, and Bix would have participated, would have recorded a solo and would have had his pride bruised (although part of the band would of course get together only two months later, avenging themselves by recording some stunningly beautiful dixieland ensembles for Gennett).