I know that that would not happen
You were correct. I used your answer today (13 Nov 2013) and it worked.
Say the objective is not to sound like a book-learned gringo in front of Brazilians; how would a native write:
I know that would not happen. AND
I know that that would not happen. AND
Which one would they use?
The Portuguese sentence means "I know that that would not happen".
But saying only "Eu sei que não aconteceria" sounds awkward, since the subordinated clause requires a subject also.
How about: "I know that IT would not happen"? Can this be considered correct?
It should also be correct.