The phenomenon of frustration, which gives rise to many fascinating phenomena, is conventionally associated with the topology of nonbipartite lattices, where nearest-neighbor (nn) interactions and global connectivity compete in the lowering of energy. The issue of rattling atoms in spacious lattice sites is a separate occurrence that can also lead to a high density of low energy states (unusual low temperature thermodynamics) and to practical applications such as in improved thermoelectric materials. In this letter we address a unique situation where both phenomena arise: a four-fold single-site instability leads to rattling of cations on a diamond structure sublattice where nn interactions frustrate simple ordering of the displacements. The system deals with this coupling of rattling+frustration by commensurate ordering. Such a disorder-order transition may account for the second phase transition seen in KOs 2 O 6 within the superconducting state, and the unusual low-energy dynamics and associated electron-phonon coupling can account for the qualitative differences in physical properties of KOs 2 O 6 compared to RbOs 2 O 6 and CsOs 2 O 6 , all of which have essentially identical average crystal and electronic structures.The pyrochlore-lattice-based structure with a potential to support magnetic frustration has attracted attention to AOs 2 O 6 (A=K, Rb,Cs) group. Unexpectedly large variation of the superconducting T c throughout the group (from 3.3 K in CsOs 2 O 6 to 9.7 K in KOs 2 O 6 ) [1, 2, 3] together with reports of anomalous nuclear spin relaxation [4] and indications of anisotropic order parameter [5] in KOs 2 O 6 pointed to a possibility of unconventional pairing and fueled the early experimental interest. While the issue of superconductivity remains controversial in the light of recent pressure experiments [1], unusual transport and thermodynamic properties were found in the normal state of KOs 2 O 6 in sharp contrast to the standard metallic behavior of RbOs 2 O 6 and CsOs 2 O 6 [6, 7, 8].Uniquely to KOs 2 O 6 within this class, the normal-state conductivity exhibits a non-Fermi-liquid behavior characterized by a concave temperature dependency down to low temperatures [9,10]. The low temperature linear specific heat coefficient is estimated to be substantially larger than in RbOs 2 O 6 and CsOs 2 O 6 [10]. Recently an intriguing λ-shaped peak in the specific heat was observed in good quality KOs 2 O 6 single-crystals indicative of a phase transition at T p = 7 K [10], within the superconducting state. This observation was recently confirmed [9]. Notably, the peak position and shape do not change even when the superconductivity is suppressed below 7 K by the external field. Insensitivity to such a profound change of the electronic state indicates that the peak is rooted in the lattice dynamics rather than intrinsic electronic degrees of freedom.Electronic structure investigations [11,12] have revealed a considerable bandwidth of the Os-5d-t 2g 12-band complex of about 3 eV which does not support the ide...