The order of magnitude chosen to calibrate the metric on doesn't change the prefix magnitude.

1 kJ = 1000J 1 kg = 1000g

Adjusting prefixes puts the units on the order of magnitude where they are easy to write in typical domain problems. For a heat-capacity and heat-transfer problem, I might end up with J/kg or kJ/kg being convenient, while for expressing the specific energy of jet fuel, I'll use MJ/kg because it's 39.

In the case of the kg, I'll bet that 1g was simply too small for the tools of the time to make an accurate model that was reproducible to the desired accuracy. For all I know, the weights were die-cast from the same melt, and the effect of scratches gets reduced as the surface-area/volume ratio goes down.

It was a bad decision by french revolutionaries: http://www.bipm.org/en/si/history-si/name_kg.html

However all the standard prefixes still apply normally, ie you will have milligrams (mg) that are 1/1000000 of 1kg.

Check out this veritasium video https://www.youtube.com/watch?v=ZMByI4s-D-Y - It goes into a little detail on how the kilogram got it's name, it is also very interesting in it's own right.

Other SI units can and obviously are used with it. Micrograms, milligrams, and grams are really commonly used. I'm not sure why they chose to do it this way, but it definitely doesn't really have any bearing on how it's used.

Because the margin of error on a weighing device is typically constant.

Therefore, a better gramme could be established by weighing a kilogramme and dividing by 1000.

This is also why an STP ml of water (used to) weigh a gramme, btw.