Someone suggested a while ago, during the preview for Bird of Prey #8, that Knockout, given her general seperation from the New Gods and Apokolips, and given her lack of appearance in Final Crisis, that Kay could have simply ignored what was going on and not wanted to get involved in anything.
It's a simple little bit of explanation that Gail Simone could easily pull off if she wanted to bring the character back. That said, I wouldn't be surprised if we just happen to see something during Blackest Night with Scandal having to confront her dead lover.