[Ken Cook]

I have to say, just getting up and walking out strikes me as dead wrong and it has nothing to do with seeing "too many nails." (But I like the expression!)

As CIVILIZED human beings, we have a responsibility to our fellow civilized human beings. If I see a befuddled little old lady about to walk into traffic, I'm going to STOP her.
Why? Because I want to be a hero? Absolutely not, because I feel that allowing her to come to harm by inaction on my part is tantamount to pushing her into traffic myself! (IF I could have stopped her, I don't feel responsibile for the human race as a whole.)

The same ethics apply here. I have the ABILITY to do something to prevent harm, therefore I must ACT to prevent that harm.
How?
As someone above said, discreetly call a waiter over, inform him to quietly inform the manager of the situation and keep the chef from returning to his table until he KNOWS the situation is safe. Whether Management calls the police or not is THEIR call and their responsibility, not mine.

From that point on, I would enjoy my meal and keep and eye on the situation. If the man with the knife displayed it in a life threatening manner, you bet I'd act on it.
But NOT until he acted in a hostile manner.
The way "the rules" work, you've gotta let the BG make the first move. It puts us at a disadvantage, but that's the price of being a moral creature.