All you should need is to merge it and rebuild. Do you now have KmlDataSource in your Cesium.js and/or Cesium.uncompressed.js? That’s the first thing I would check.
Emily, I’m not sure if you meant “git merge” when you mention merging the Cesium-kml folder with 1.2; but you don’t need to do anything like that. However, you will need to actually build the branch yourself. How to set up your machine to build Cesium is detailed here: https://github.com/AnalyticalGraphicsInc/cesium/wiki/Contributor’s-Guide
Assuming you have a git clone of the repository; it’s just a matter of checking out the kml branch and running the build step (detailed in the link above); however, if you are just downloading the zip of the branch from GitHub; you’ll still need to unpack it somewhere and build it, which still involved setting up your machine using the above link.
Assuming you are used to using the actually Cesium zip releases; that means running the makeZipFile step, which will produce the release zip at the root level of the code base.
Hope that helps,