I think part of the issue is the wording of "...fit right in..."
No, of course the engine from a completely different type of bike isn't going to be plug and play.
Better phrasing could potentially be "Could a KX engine be made to work with a Z125 frame and if so how much fabrication would be involved? Has anyone done something like <insert two stroke grom example here> with a Kawi?"
While it wasn't the friendliest of greetings I certainly don't blame Zaph for the sarcastic answer because what you asked, at face value, is a stupid question.
Ok... putting on my helpful pants for a second here.
A tiny oil burner and a parallel twin aren't exactly even apples to oranges, but page through HelicopterMike's Z300 build
to see the kind of work you might be signing yourself up for, even if the engine does fit easily.
FWIW I get the feeling that there would be a lot of interest in your build here. Plenty of people will offer advice and troubleshooting based on their experiences with the Z125 but to my knowledge nobody has done this kind of swap on a Z yet and heck no, it's not going to "fit right in."