The quote at least contextualises "premature". As it is, premature optimisation is by definition inappropriate -- that's what "premature" means. The context:

a) gives a rule-of-thumb estimate of how much optimisation to do (maybe 3% of all opportunities);

b) explains that non-premature opimisation is not just not the root of all evil but actually a good thing to do; and

c) gives some information about how to do non-premature optimisation, by carefully identifying performance bottlenecks after the unoptimised code has been written.

I agree with GP that unless we know what Knuth meant by "premature" it is tempting to use this quote to justify too little optimisation.