You have similar problems to me, in that you don't have the resources to configure your Empire army for sixth edition. That said, it's not all doom and gloom, and if you want to have any sort of mobility at all, I'd actually keep the Knights, in spite of their mediocrity, providing you can add a second unit.
If you can get two units of Knights working together (the larger Inner Circle unit, combined with a smaller unit for flank charges), then they become reasonable for attacking moderate sized blocks of average to poor infantry. It would help if the Inner Circle Knights had a character with them though, such as a Captain, or even a Grand Master.
Wizard Lords don't make very good generals in my view, as the Empire need someone with more staying power, and someone who can inspire or bolster other units in some way, so you could find space for the Grand Master, or General of the Empire, with a swap here, and allocate more points to bolstering the Battle Wizard's capabilities instead.
You could also consider taking two Battle Wizards instead of the Wizard Lord.
Warrior Priests are helpful, but not to the extent that you definitely need two. If you need to cut a few points, I agree with Benis that you could afford to remove one.
I agree about making the missile troop units detachments too.
I have very poor success with my own artillery, and I think that its better to spend more points on troops, and characters, than it is on the guns, so you could also look to make cuts here. High Elves are still pretty expensive if I recall correctly, and are not likely to come in huge horde formations, so I'm not sure how useful the Mortar is likely to be.
Overall, I wouldn't say that dropping the Knights is the solution, as there are other ways to modify the list. You could opt for mass missile fire in their place, but it's close combat that wins games of Warhammer, and I think that you would be asking too much of two small (for the Empire) infantry blocks to win you the battle on their own, so I would be tempted to keep the Knights, add a second unit, and then fiddle around with the list in other areas.
I hope that helps.