Its not compatible with KR, sort-of. Kvatch Rebuilt adds a sort of cloned Kvatch to the game, even if your only to the stage where the people at the camp move the camp into the walls, its too late. Vaults adds the Kvatch Vault to the castle interior, which can only be accessed through the vanilla space. It's easy enough to just 'coc KvatchCastle' to get in though, not a huge problem.
Spoiler After all, all you get is an ebony claymore with some fire damage, and its hidden fairly well I'd say.