Oh yes, it does. And in fact, it was primarily designed with SP in mind.
I have been trying to convince them to split the project up into two versions (one for Mp and one for Sp), since some of the Sp stuff breaks compatability online with people using vanilla JK. So you have to use an older version online to be able to play with people who don't have it.
I also checked and you can use it with MotS MP as well (just rename the Gob to a Goo), though if you try to edit your character (for one of the enhanced models) it will crash, since I guess the model previews haven't been updated for MotS.
If anybody wants me to send them the old version for compatability, please let me know (email@example.com).
Personally I hate the look of the new Rail detonator (looks like a cross between the QuakeII shotgun and a tommy gun), and I would prefer if Kyle wasn't wearing his Jedi Outcast gloves (he was gloveless in both the JK1 game and cutscenes), but otherwise I think it's pretty darn awesome.