Something to observe: During the Knee's hitlag on Diddy, in the canceled vid, Falcon's legs hit the ground, much like in his landing animation. In the uncanceled, he's still hovering for a moment.
In fact, it looks to me like the difference in landing lag is the same as the time it takes him to land in the uncanceled animation. So rather than necessarily canceling part of the landing lag, it looks to me like that lag is simply starting sooner.
You have a point, but it's not entirely true. Step it forward one frame at a time from the peak of his jump, and you'll see that they desynch, with the one on the right simply falling faster, and because of this he does in fact connect with the knee closer to the ground and there are a couple of frames in which the one on the left has to continue falling before he lands, but the difference between how much time it takes to land and how much landing lag is cancelled is by no means the same. Keep stepping forward one frame at a time and you'll see.
So no, it's not just a matter of starting the landing lag earlier (in this sense). There's something else going on.
It might be that the landing lag starts as soon as the move connects (as you 'land' at literally the same time), and the immense amount of hitlag simply means that a lot of the landing lag frames are spent in hitlag so that by the time you're out of hitlag you only have like half or less of your landing lag to go through, or in some cases perhaps none.
What this would mean is that it is a universal technique, but the more hitlag you have, the more landing lag frames you 'save'.