can code compiled with k2 be consumed in projects not using k2? i.e. if we wanted to enable it in subprojects that can enable it but not necessarily app

Yup, at least I do it and it works

Basic answer is no. K2 marks all binaries as pre-release, which means that they can be used as dependencies only in pre-release project (this behavior is needed because we can not guarantee that ABI produced by K2 won't changed before release) But if you want to compile some internal library/subproject and don't care about ABI changes (e.g. because all consumers of this lib are compiled together with lib itself) you can add

-Xallow-unstable-dependencies

to arguments of your application