it's no problem to use the kontakt multi timbrally, but you have to set up the individual midi channels as standard midi instruments to use in arrange, and then use a transformer to convert the cc7 messages into (i think cc11) messages that will reach the individual slots within a kontakt instrument.
i don't use auxs at all with kontakt.
there other advantages to doing things this way. it means you get much more control over the midi data flowing to the kontakt instrument.
for example, you could use meta events (such forte, piano, tremelo, trill, stoccato symbols in the score editor) to switch between articulations in your kontakt instance.
it's very easy, although a little fiddly to set up, but once you have done it, obviously that becomes your template.