This is a great aspect of the Knight, but (there is always a but) it should only work for intelligent creatures. A brain less plant should not be offered a challenge by the knight. How is it that something with no intellegent will know a knight from a dog. It just attacks. Also there should be for a intellegent creature a save or a sence motive, like a will save to ignore the challenge. This makes more sence in stead of the Knight running out on to the battle field and calling out the rouge or mage, or the construct. Give the oppoent a opposing roll. This makes more sence. In my game we have played tested the knight, in the down loaded form and a improved form with saves and such. We use a will save for a itellegent creature bassed on the knights level, and charisma. And for any thing under at 8 intelegent, he can not challenge him, in stead the knight looks for that big powerful creature and goes after it him self.
As for the Mount. Better to use the Palidine way of mount. WE are still experimenting on this.
The Iron Tower
As stated in other threads on the subject, the knights challenge is not directed at the target but internalized by the cavalier. Putting an intelligence restriction is an attrocious idea and counter to the strives made in pathfinder to keep major class abilities from being restricted against a large portion of potential enemies. The cavalier does not 'call them out' he instead focuses his attention on them to the exception of all others. This is not the 3.5 knight, it is a different class, and does not need to match its abilities. There is a discussion going on to rename the cavaliers challenge in order to alleviate some of this confusion and for a name that better fits the theme.