Is it possible to use samples from Kontakt player or Sampletude 3 to substitute for the midi files included in BIAB?

HI

Yes but there is no automatic gm patch/voice set from these vsts.
But any midi instrument that has midi data on a song track can play a Kontakt voice
But each track needs to have a suitable instrument on it to suit the songs instrument.
So you need multiple instances of kontakt, one for each track that you are using say a Kontakt grand piano for the piano track a kontakt guitar for the guitar track and so on for strings horns pedal steel etc
Take care with channels in kontakt.
These will need loading for each song to suit

VSTs are really not substitutes for MIDI FILES per se... They typically support more sophisticated instrument sounds than the usual GM modules.