Can the Privateer conversion kit be removed once applied, restoring the Kraken to its original state? Can you swap back and forth?

No, the kit is a full conversion from one variant to another. To convert between the two in-game, you will need to take the Kraken to a capable shipyard, pay a significant fee, and wait for the work to be completed. This is the same mechanic we will have in place for other capital-tier ship upgrades and customization.