If one knows enough about the world, one should know that an oar partly submerged in water (seen from a particular viewing angle) should look bent just like that. If it looked straight, I suppose, a longtime oarsman or a person very familiar with the laws of refraction might think the oar looked strange, might even think that it looked like an oar that is actually bent (bent in such a way as to exactly compensate for the bend a straight oar would seem to have at that angle)...
So is the skilled oarsman experiencing a visual illusion as he looks at the oar? If we say no, then I'm worried we're off onto a slippery slope to entirely denying the possibility of illusions that are known to be such.
Note, though, that's there's a fair gap between mere propositional knowledge and the kind of internalized know-how or "fluency" possessed by the skilled oarsman. I am still very much 'taken in' by the Muller-Lyer illusion, despite - intellectually - 'knowing' that it is an illusion. For it to cease to count as an illusion to me, I would need to internalize this knowledge in such a way as to render me fluent in interacting with Muller-Lyer lines. (Were I to come across a worldly instance, I should automatically respond in ways appropriate to the lines being of equal length; just as the skilled oarsman automatically responds appropriately to the shape of his oar in the water.)
Another nice case is that of mirrors. Does looking at a mirror create an illusion that twin-you is in front of you? When one doesn't know it's a mirror, the "yes" answer seems plausible, but this answer rings less true for the familiar case when one knows it's a mirror. But if one says "no" in this case, then the question is whether there's a principled distinction between this case and the bent stick case, or any other case of a "known illusion".
I suppose that for there to be a principled distinction, one will have to make the case that in some cases (e.g. the mirror case), knowledge of the relevant effect penetrates the experience and changes its content, while in other cases (e.g. the stick case) knowledge does not penetrate the experience in this way. Perhaps there is some intuitive plausibility to the claim that the relevant spatial phenomenology is changed by mirror knowledge in a way that it's not changed by bent-stick knowledge. But it's not clear what the source of this difference is.
Could practical competence vs. merely intellectual knowledge ground this difference? (Imagine someone who has just learned what a mirror is, but who is not yet sufficiently practiced to be competent at using them. It seems plausible that the mirror could still create a sense of 'illusion' for them, even though they know full well - intellectually, at least - what is going on.)
[Related posts: What is illusion?]