This post will be edited with further information in future.
* The real point of divergence between the canon world and this one is somewhere before the events in 2552, but events started to visibly happen differently somewhere around where the games would. To be precise, the Master Chief remained on Reach; it's unknown whether any other Spartans made it to Halo 04. By the time of Halo 2 things are very different.
* The Covenant won but decided to accept a surrender rather than destroying what was left of humanity, on the principle that the Flood were starting to breathe down their necks a bit too heavily. The Marines were absorbed into their forces; the remaining Spartans refused to go so easily, and there was an insurrection led by one John-117, now stripped of rank. There's still stories and rumours about what happened, though that's what they are - stories and rumours. A lot of people don't actually believe there was a war at all, and that it's all just something made up by rebels and the likes. On the other hand, there are others who believe that the Chief is still out there...
* The whole Elite insurrection/exile whatever didn't really go off. There are still Heretics and rebels and all that but at least some of the Elites and their allies have remained/been allowed to remain loyal despite it all. (Note that Regret survived and the Elites were never demoted in the hierarchy.) There's a lot of friction between Elites, Brutes and humans, everyone distrusts everyone else, but the Flood threat has helped keep them together. Just about.
* Earth and any worlds bearing Forerunner artifacts have been evacuated.
* K himself was born sometime after the end of the war; he's never actually known a non-Covenant world, and the closest he's got to knowing anything about it is hearing stories as a little kid. He's never actually heard of Earth or Reach (or at least he'd never heard of Earth in the past).
* In some ways, he's best described as a 'Spartan 2.5'. He was picked in a similar way to the original Spartan-2s - no war orphans now, after all - but he went through an accelerated training program more similar to the 3s. His armour's closer to the spec of MJOLNIR than SPI, with a few tweaks. It's actually lighter and more flexible than the usual configuration, after all the years of tweaking it's gone through. His shields are Elite style, blue; he doesn't have any kind of active camo in there. There's no capacity for an AI in the system at all; there's part of the weight reduction right there.
* K considers himself a Demon, pure and simple, though he knows it's not really a literal title. As a rule, the term Spartan's not even used (it's been deliberately suppressed and the official human term is Special Assault Forces), although he knows what it means. He'll use it when he's around others who use it.
* Humans aren't seen as having much honour at all due to the fact they've been hanging around Forerunner artifacts and not paying any respect; Spartans even less. K's been taught that he has no honour and no soul and that he's not going on the Great Journey unless he's proved he's worthy of it - he doesn't actually resent it, though, it's just the way things are. Ditto the name - they're not thought worthy of them. While he technically has the rank, he doesn't have a lot of effective power even over the likes of Grunts. Even despite that, human troops are used in a lot of the toughest battles and Spartans/Demons are used in the very hardest situations. It's a very conflicted situation - they're respected for their abilities but nothing else.
* A slightly more cracky and Red Vs Blue element in this universe; Sangheili and humans are capable of interbreeding. The offspring tend to bear traits of both parents (not in Junior's sense), tend to be quite sick as children as the human and Elite traits don't match up, are sterile, and are regarded in a very bad light. Enough medical care and they'd be up to strength but they don't tend to get it.
* The Prophets refuse to let humans go anywhere near Halos or near any kind of Forerunner artifact. As far as the old setting-off-the-Halos thing goes? The Prophets may be able to talk the Forerunner/Reclaimer talk but they can't actually grab any Indexes and set the things off; humans are still in theory the real Reclaimers but given they're not allowed to know about the whole situation it doesn't really do them much good. Anyone saying they might be would just get laughed at.
* There are Flood. There are a lot of them. They've gotten the hell off Delta Halo and are causing some serious problems. Sometimes there isn't a lot to it but to glass the worlds they've infected but that's not really a solution in all situations - some of the worlds they've hit are quite big, important ones. The fleet's far from as big as it was back in the old days.
* K's very loyal to the Covenant doctrine, very religious - he's one of those people who'll use 'the gods said it' as an excuse for anything. Common sense or logic is not really going to get into his helmet where it's concerned, even if in most ways he's a bit more rational. The phrase 'We have always been at war with Eurasia' might be appropriate here. He absolutely believes the party line and the deal with why humans tend to get a rough time. Still thinks it sucks at times but he doesn't argue with it, it's just the way things have to be, necessary evil and all that.
* The mun has no idea where his accent came from. It just arrived in her head as she was working out his character.