As a keen student, I appreciate teachers who either know their stuff, or openly admit to having no clue. Teachers who make something half-feasible up annoy me.
English-specific...I don't think it's possible to know every single rule. Rather, an English teacher should aim for an understanding of the basic rules, and, at the very least, an intuitive sense of the rest. Some rules are ambiguous, and a teacher may have a different opinion than a student. Take the Oxford comma. Student may ask "It is compulsory to have a comma here, before the 'and'? Because I've seen texts with it and without it." Teacher would then reply "I prefer to use X method, however there is no strict rule. You can use whichever you'd prefer"
Teachers can still come across as being intelligent if they don't know something. I recall asking my English teacher the rules on usage of 'which' and 'that', because I wanted to prove my boyfriend wrong (stupid man dots his paper with 'whiches' that should be 'thats'). She ummed and arred for a bit, didn't give me a definitive answer, and advised me to look it up on the internet. I still respect her immensely, because she's a great teacher, incredibly intelligent, and cares about her students.