Hi!
You always should use the latest patch. As it is now you can chose between the lattes official one (1.12)
http://www.ageod-forum.com/showthread.php?t=11595
Or the lattes beta patch 1.12a (RC%) (if you are a little adventurous

)
http://www.ageod-forum.com/showthread.php?p=121696#post121696
The Historical MOD is done by Gray Lensman, AACW coordinator. In there you will find his latest work between patches, as what is used and tested on the mod is usually included on the next official/beta patch of the game.
So you only need the MOD right now if you install the official 1.12 patch. The most recent beta pach already includes the MOD improvements.
By "Vanilla game" it means a normal AND patched up game (always!!

).
One that don't use any other mods that can cause conflicts with the Historical mod.
But official patch and historical mod are compatible.
Historical mod is like a pre release of the latest additions meanwhile they get incorporated on the game patches.
Hope it helps!
Regards!