These are user to user support forums, so nobody can clarify Apple’s own support or technical language for you.
But I will say this - I use a recovery key, which I made as soon as that option was introduced. It appears I can still add a recovery contact as well (although I don’t wish to do that as the key is enough for me). But simply making an account recovery key does not stop me from adding a recovery contact as well. So it appears to me that those two options are compatible.
Whether the contact alone would still be useable to recover the account is not clear to me though as that would seem to counter the very idea of an account recovery key to me? I would actually hope that, once enabled, recovery requires the key, period. No options, no alternatives. That to me seems the very point of the account recovery key system.
It is the Apple support operated automatic account recovery system that is unavailable when using a recovery key.