Will panaracer 27.5x3.5 tires on Velocity Blunt 35 rims fit on a Medium Surly Karate Monkey Frame? Will panaracer Fat B Nimble 27.5x3.5 tires on Velocity Blunt 35 rims fit on a Medium Surly Karate Monkey Frame?

I doubt there will be any clearance issue on the front fork since it can hold a 29x3 surly knard with plenty of space.  However, I'm not sure about the rear triangle.
Yes.

http://surlybikes.com/gallery/karate_monkey/karate_monkey_b
It took me a while to confirm that these were indeed the panaracer fat b nimbles due to the low resolution of the image. However, it's definitely a panaracer, and there are only so many models that size. Like BEVR1337 said, I may have some issues if using a front derailleur, it looks like this should clear the frame fine. Rims appear to be velocity duallys which are a bit wider than the blunts, so if it is a good fit with these rims, the narrower blunt 35s should be totally fine.