The obligations under EC 261/2004 fall on the operating, not the ticketing carrier. While it is the passenger's choice to refund or rebook and I am surprised that KL will not rebook from elsewhere in the locale, you are caught between OK and KL.
I would start by calling OK and determinging whether it will reroute. Chances are that it will not, but it is worth a call. As leverage, it is worth noting to OK that as the operating carrier, if you are forced to reroute on your own and incur hotel costs, those and meals will form part of a claim under the Regulation as it is OK which has a duty of care.
Finally, consider the cost of flying to PRG from one of those other locations you mention on a separate ticket (and allowing more than enough time for the transfer).
A lot here will depend on how much risk the passenger is prepared to take, financial & otherwise.
I would then call KL back and escalate if necessary.
Please report back with your progress (or lack).