I have installed MPK2s on three of my Yugos, but they have been fixed stock rifles (M70B1s and a M72). I don't see why you couldn't do this, but you'll have to live with some compromises because of the underfolding stock.
The first problem, as you have already noted, is the inability to fold the stock with the mount in place. The second problem is the fact that the MTK-83/BP-01 slides onto the rail from the rear, something that will not be possible on your underfolder due to interference from the folding mechanism on the receiver of the rifle. I compared my M70AB2 to one of my M70B1s with a MPK2 and it looks like this problem can be overcome by doing the following:
1) Fit the MPK2 to the rifle.
2) Remove the MPK2 from the rifle and mount the BP-01 to the rail (you may have to adjust the clamp, be sure to do this now).
3) Mount the MPK2 and the BP-01 to the rifle as a single assembly. This is possible because the screws for the MPK2 start from the inside of the receiver into the threaded rail.
Once the mount is on there, you will not be able to remove it without removing the rail from the rifle. The upside of using the BP-01 is that, being a high-rise mount, you can field strip the rifle for cleaning without removing the mount from the rifle. It will allow you plenty of room for cleaning while in place in my opinion.
Another potential downside (depending on how you feel about it), is that your cheek weld is going to become a chin weld because of the height of the BP-01. Be sure to get the lowest scope rings you can find.
Another possible combination is a MPK2 rail and a POSP 4x24 like this here:
Link. The scope is offset to the left approximately 1" when mounted, allowing you full use of your irons while in place. I have this scope on one of my Yugo M70s and I like it a lot. Just throwing that out there as another possibility for you.