From Fact Overwriting to Knowledge Evolution: Causal Editing via On-Policy Self-Distillation

While Knowledge Editing (KE) enables efficient updates, its dominant Static Fact Overwriting paradigm treats LLMs as discrete databases, forcibly injecting isolated facts. Fracturing pre-trained logical topologies, this triggers Epistemic Dissonance -- a pathology where un-evolved legacy priors force the model to explicitly negate the injected update. Idealized interventions reveal that this is an inherent structural flaw rather than mere algorithmic noise, with a zero-distortion proxy yielding a catastrophic 95.6% self-refutation rate. Given the causally driven nature of real-world knowledge, grounding updates in explicit causal narratives effectively collapses this conflict rate to just 6.6%, underscoring the imperative for a paradigm shift toward Causal Editing. To internalize this evolution, we propose CODE (Causal On-policy Distillation for Editing). By coupling causal bootstrapping with asymmetric on-policy distillation, CODE engraves causal transition logic directly into parametric memory. Experiments on LLaMA-3.1 and Qwen-2.5 show CODE drastically suppresses self-refutation to 1.8% while securing robust multi-hop accuracy (up to 83.5%), seamlessly transforming discrete fact injection into coherent knowledge evolution. Code is available at https://github.com/CrashBugger/CODE.