Electrical Issues – Why Double Switch Controls Both Light Circuits?

I'm just thinking out loud here. It is hard to state anything with certainty in a situation like this where there is no guarantee of what somebody else did with the wiring a long time ago...so forgive me if this suggestion isn't even worth what you paid for it. ;)

From what you have said here, it sounds to me like that red wire makes its way back to the lights, and acts as the "hot" for the lights. Who knows where the lights are getting their neutral side connection. Doesn't really matter. Obviously it is getting there somehow.

So to make the lights light, your existing switch is getting "hot" from one of the two black wires, and is supplying that to the red wire.

So think of your red wire as the "hot out", and ONE OF the two black wires is your "hot in".

So you need to use a meter to see which one of the two black wires is your "hot in", and treat it that way and cap off the other black. Then use your red wire as the "hot out".

Again, this is just me thinking out loud about what I would try. I take no responsibility for any bad stuff that might result from it. All possible disclaimers apply. ;)

If it was wired with knob and tube originally, it's possible that the 3 way switch was old enough to be wired as "Carter 3-way":

^{Image from Popular Mechanics, October, 1971}

In this setup, the load is switched between H-N (on), H-H (off), N-H (on), and N-N (off). Since the 3 ways have the load on the common terminal, the "travelers" can both test hot.

Another old 3-way setup that used to be common with knob and tube was a travelling bus or Calfiornia 3 way:

^{Image from http://www.electriciantalk.com/f29/threeway-nightmare-41332/index2/}

I've run into this a couple times, although in all the times I've seen it the neutral was being switched. It's possible to do the same thing with the hot being switched, in which case you can also have 2 live "travelers".

Note that the top layout hasn't met code for a long time (or the bottom with a switched neutral), but at the same time you can't assume that you won't run into them (or various other 3-way wiring patterns) in an old house. The best way to test for non-conventional wiring like this is with a multimeter at the fixture. Test (what should be) the hot and neutral with different combinations of switch positions and you should be able to sort out how it was wired.