  We study the effect of coupling magnetic impurities to the honeycomb lattice
spin-1/2 Kitaev model in its spin liquid phase. We show that a spin-S impurity
coupled to the Kitaev model is associated with an unusual Kondo effect with an
intermediate coupling unstable fixed point K_c J/S separating topologically
distinct sectors of the Kitaev model. We also show that the massless spinons in
the spin liquid mediate an interaction of the form
S_{i\alpha}^{2}S_{j\beta}^{2}/R_{ij}^{3} between distant impurities unlike the
usual dipolar RKKY interaction S_{i\alpha}S_{j\alpha}/R_{ij}^{3} noted in
various 2D impurity problems with a pseudogapped density of states of the spin
bath. Furthermore, this long-range interaction is possible only if the
impurities (a) couple to more than one neighboring spin on the host lattice and
(b) the impurity spin is not a spin-1/2.$
