Okay some interesting news. So I was playing around with this again tonight, thinking if there was some other way. So I hooked up it again in Logic Pro X this way:
1. Opened up the VEP server application on my main DAW computer (Mac) basically connecting to VEP locally rather than on a slave computer for purposes of testing.
2. Added an instance of Komplete Kontrol inside the VEP server rack and within that a Komplete Kontrol instrument.
3. Saved this as a server project.
4. In Logic added a VEP Server plugin and connected to this project (as usual method).
Now as I observed previously, I can play the sounds of Komplete Kontrol from my DAW when connected via VEP, but the keyboard thinks its just a standard midi track so the Lightguide or Hardware Controls do not display Komplete Kontrol values.
If I switch focus the the VEP server on the computer outside the DAW (either by clicking on the VEP software or using VEP to auto raise it) it comes alive and if I switch back into the DAW stays that way, but when I switch track to a non KK instance in Logic it switches into Midi Mode and will not go back when focus is switched back to the VEP/Komplete Kontrol track.
So I went back into the VEP server rack and out of curiosity clicked the keyboard symbol in the KK window and sure enough the keyboard sprang back into KK mode. I then remembered that there was a key routine on the hardware to do the same thing.
So back in Logic, I used the up/down arrows to select the non KK track to force the loss of KK display, then hit Shift and Instance keys on the KK keyboard (Shift is top left and Instance is near the Browse button). Guess what it works!
So basically hosting Komplete Kontrol inside a VEP server instance WILL work, but to get focus you have to press Shift + Instance. It seems that Komplete Kontrol cannot update track focus when hosted inside VEP it just needs some help.
Now what I have not tested is whether this also works on a slave computer as I have not installed KK software on it as there was no point before. Also personally not sure I ever will as my slaves are maxed out as it is hosting Play and non KK Kontakt libraries. But I can see myself using this method on VIs using KK that are currently saved inside my DAW as loading them separately has its benefits switching projects/optimising CPU performance.
Just thought I would post this in case anyone else out there is using Komplete Kontrol and VEP and wanted to do the same.