According to most reports so far, there are one of three potential scenarios that will see you meeting the KKK in the game. One is where a new member is being initiated, another is where they're burning a cross, and a third is a meeting where they're complaining about a lack of new members.
In all cases, the meeting is randomly generated and doesn't come into being by any particular actions on your part. It's simply a case of riding around - always at night - off the trails and roads and finding them. Very often, the in-game KKK hide out in wooded areas and sometimes near the town of Rhodes, but a new discovery in the past couple of days has people talking.
The 'honor' system in 'Red Dead Redemption 2' is impacted when you shoot, attack or kill someone unprovoked. In other words, if you're riding along and decide to just randomly shoot a passerby unprovoked, your 'honor' system is negatively impacted.
However, if you kill everyone in the KKK meeting in an unprovoked manner, your 'honor' system isn't impacted at all. That's right, folks - you can murder every single member of the KKK you find in the game. Shoot, stab, burn alive, bomb, whatever - it's all good, and it has no repercussions of any kind. The law doesn't even bother to come look for you afterwards, which is also a bonus.
It's one of the few times in the game where you can murder a whole group of people and get away with, and let's face it - these people deserve it.