Also as a note, we are assuming that under the wallpaper is lead paint as it is chipping under the paper...that's a whole other monster I am note sure how to tackle.

There is a paint forum.

Yes, you might want to post this on the Paint forum.

Re: the possible lead paint: do you have young children in the home? I am in my 60s and take some precaution because I assume I'm working with lead paint. My blood tests don't show any rise in lead. I would be doing things differently if there were children around.

To answer your question, yes, Gardz is a primer so there is no need for an additional primer .Do NOT use the kilz over the borders, you( or somebody else) will regret not removing it.

In the 40's the paint "may" have been lead based. But surely under the paper is not the original paint....surely in 75 years the house has been painted....and in the mid 50's latex paints became usual for flat wall finish paint.
Take the paper off.....and in all the paper removal I have done, unless I damaged the dry wall, and in a house of the 1940's most likely the walls are real plaster....and there will be no need for Kilz. Just paint....why do you think you will be dealing with raw plaster?